Hong Kong: HANG SENG INDEX (.HSI) slides, mainland markets jump on PBOC move

Hong Kong: HANG SENG INDEX (.HSI) slides, mainland markets jump on PBOC move

Hong Kong: HANG SENG INDEX (.HSI) slides, mainland markets jump on PBOC move

Hong Kong stocks extended losses in the morning session on Monday, hit by concerns about a possible Middle East conflict after the US killed a top Iranian general last week, though energy firms were boosted by surging oil prices.

The Hang Seng Index fell 0.7 percent, to 28,261.

On the mainland, the Shanghai Composite Index rose 0.7 percent, to 3,106 while the Shenzhen Composite Index jumped 1.1 per cent to 1,779 as investors cheered central bank authorities’ pledge at the weekend to maintain a flexible monetary policy.

The People’s Bank of China (PBOC) had said that it will maintain reasonably abundant liquidity in the banking system.

Tokyo was down 2 percent by the break as dealers returned for the first time since the new year break and Sydney was off 0.4 percent.

Singapore fell 0.5 percent, Seoul shed 1 percent, Taipei lost more than 1 percent and Manila dived 1.7 percent, while Jakarta slipped 0.7 percent.

With the crisis in Middle east escalating, both main crude contracts were up more than 2 percent in early Asian trade, with Brent above US$70 for the first time since September when attacks on two Saudi Arabian facilities briefly halved output by the world’s top producer.

Safe-haven assets popular in times of turmoil were also on the rise, with gold at highs not seen since mid-2013, while the Japanese yen was at a three-month high against the US dollar.

Technical Indicators

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 27,368.67.

The projected upper bound is: 29,074.80.

The projected lower bound is: 27,443.95.

The projected closing price is: 28,259.38.

Candlesticks

A black body occurred (because prices closed lower than they opened).
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 26 white candles and 24 black candles for a net of 2 white candles.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 5 falling windows in the last 50 candles–this makes the current falling window even more bearish.

Momentum Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 55.7812. This is not an overbought or oversold reading. The last signal was a sell 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 62.72. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 1 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 52. This is not a topping or bottoming area. The last signal was a sell 0 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 14 period(s) ago.

Rex Takasugi – TD Profile

HANG SENG INDEX closed down -225.311 at 28,226.189. Volume was 16% above average (neutral) and Bollinger Bands were 58% wider than normal.

Open     High      Low     Close     Volume___
28,326.50028,367.86928,054.28928,226.1891,793,426,560
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 28,139.82 27,155.69 27,554.08
Volatility: 13 19 19
Volume: 1,320,089,344 1,485,563,392 1,691,450,368

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.

Summary

HANG SENG INDEX gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
HANG SENG INDEX is currently 2.4% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume into .HSI (mildly bullish). Our trend forecasting oscillators are currently bullish on .HSI and have had this outlook for the last 12 periods.

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