Hong Kong: Hang Seng Index (.HSI) Shares Mixed
The major Asia Pacific stock indexes are trading mixed on Friday with China and Hong Kong posting losses. Market conditions are much calmer than earlier in the week, which suggests money managers may have priced in most of the negative events with hedges in safe-haven assets like Treasurys, the Japanese Yen and gold. Nonetheless, there are still heightened concerns over U.S.-China trade relations and their impact on the slowing global economy. Most of the focus for traders remains on China’s yuan fix and the psychological 7 yuan to the U.S. Dollar level.
At 07:24 GMT, Japan’s Nikkei 225 Index is trading 20684.82, up 91.47 or +0.44%. South Korea’s KOSPI Index is at 1937.75, up 17.14 or +0.89% and Hong Kong’s Hang Seng Index is trading 26037.26, down 83.51 or -0.32%.
Chinese Yuan Midpoint Fix
The People’s Bank of China fixed its midpoint for the yuan at 7.0136 against the dollar on Friday – the second time this week the benchmark was set weaker than 7. The onshore yuan last traded at 7.0506 against the greenback, and the offshore yuan moved at 7.0770 per dollar.
The PBOC allows the local currency to fluctuate against the greenback with a narrow band of 2% from each day’s midpoint. With 7.0136 the mid-point, the range is 7.1539 to 6.8733.
China Consumer Inflation Up
China’s consumer price index in July rose 2.8% on-year – its fastest year on-year pace since February 2018, according to data from the National Bureau of Statistics. Experts said that a 9.1% jump in food prices was behind the move, particularly surging pork prices.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 27,467.08.
The projected upper bound is: 26,744.67.
The projected lower bound is: 25,082.08.
The projected closing price is: 25,913.37.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.
An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend. It then signifies that the momentum may be shifting from the bulls to the bears.
If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with HANG SENG INDEX), it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 36.5119. This is not an overbought or oversold reading. The last signal was a buy 1 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 22.88. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 44 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -86. This is not a topping or bottoming area. The last signal was a buy 1 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 14 period(s) ago.
Rex Takasugi – TD Profile
HANG SENG INDEX closed down -181.469 at 25,939.301. Volume was 22% below average (neutral) and Bollinger Bands were 104% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 26,869.96 27,831.29 27,599.22
Volatility: 19 19 21
Volume: 1,815,666,432 1,580,136,320 1,796,048,256
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
HANG SENG INDEX is currently 6.0% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect moderate flows of volume out of .HSI (mildly bearish). Our trend forecasting oscillators are currently bearish on .HSI and have had this outlook for the last 9 periods. Our momentum oscillator is currently indicating that .HSI is currently in an oversold condition. The security price has set a new 14-period low while our momentum oscillator has not. This is a bullish divergence.