Hong Kong: HANG SENG INDEX (.HSI) stocks rally after Chinese central bank moves to stabilise the yuan

Hong Kong: HANG SENG INDEX (.HSI) stocks rally after Chinese central bank moves to stabilise the yuan

Hong Kong: HANG SENG INDEX (.HSI) stocks rally after Chinese central bank moves to stabilise the yuan

The Hong Kong and mainland China stock markets rallied on Monday, after the Chinese central bank signalled it would guide the market more proactively in the face of a stronger US dollar and the ongoing trade war between Washington and Beijing. Shares in the automobile sector also surged after Brilliance China Automotive Holdings posted better than expected interim results.

In Hong Kong, the Hang Seng Index rose by 2.2 per cent, or 599.40 points, to 28,271.27, its biggest daily rise since February 14. The Hang Seng China Enterprises Index also gained 2.5 per cent, or 269.42 points, to 11,049.13, marking its biggest daily increase since January 2.

After the stock markets closed on Friday, the People’s Bank of China said a component known as the countercyclical factor had been resumed in the setting of the yuan daily reference rate to counter depreciation. This caused the offshore yuan to rise to its highest level since July 31, although it subsequently reversed to a 0.09 per cent drop, to 6.8115 against the dollar, on Monday.

Overall, the bias in prices is: Downwards.

The projected upper bound is: 29,118.49.

The projected lower bound is: 27,337.30.

The projected closing price is: 28,227.89.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.

A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend.

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 74.2242. 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 53.18. 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 buy 40 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 70. This is not a topping or bottoming area. The last signal was a buy 5 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 2 period(s) ago.

Rex Takasugi – TD Profile

HANG SENG INDEX closed up 599.400 at 28,271.270. Volume was 16% above average (neutral) and Bollinger Bands were 10% narrower than normal.

Open High Low Close Volume___
28,016.66028,289.06127,956.03928,271.2702,199,534,592

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 27,640.20 28,380.41 29,978.82
Volatility: 20 20 21
Volume: 1,786,937,600 1,929,846,144 2,152,210,944

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 up today (bullish) 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 5.7% 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 volume flowing into and out of .HSI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .HSI and have had this outlook for the last 7 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.

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