Breakdown of HSI? (2010-11-22 HSI analysis)

After big drops in the beginning of last week, and some rebounces on Thursday and Friday, concerns on Ireland crisis had somehow eased. There was a rescue program offered by EU to Ireland which might be a good news to investors and the stock markets.

So let's have a bit forecast on next week's Hang Seng Index.

Daily Chart:


In this chart, HSI broke the red uptrend support on last Wednesday, and could not manage to get back above it. The 61.8%-fibonacci level somehow gave support to the index, but it could do nothing to avoid the breakdown.

MACD and its EMA dropped to level around 0, and MACD was getting flatter. There is a potential bullish signal.

So now what? Breakdown with potential MACD bullish cross?

Wait, let's check the weekly chart. It might give better hints.



The red line is a bit adjested in the weekly chart. We can see the index closed below the support line last week, but still it could be false breakdown.

Apart from the red line, we could hardly see a support until 22685, which is around 1,000 points below currently level. MACD and EMA had a clear bearish cross in weekly chart.

Combining both chart, I expect the index to further drop this week, breaking the support line in weekly chart. 22685 would be the first support.