What's next? (2011-02-07 HSI analysis)

Wish all readers happy chinese new year and, of course, a profitable year. While it is so difficult to predict what would happen or what the index would be in the end of 2011, we can still make anticipation on the movements in near future.

The coming two weeks would be quite important as it would affect the future HSI movements in longer term (which is shown in the weekly chart). Let's see the daily chart of HSI first.



I have identified few trend lines which could possibly hinder the index. Basically, HSI is currently hung in the middle of the trend lines, between the support and resistant. It is quite hard to tell which way it will go next.

MACD is nearly zero currently. The line is near its EMA, creating potential to form bull cross. However, there is not much evidence on whether the formation will succeed or not.

Let's see the weekly chart which gives more clues to us.



The green up-trend line and orange down-trend line form a wedge. The index is almost at the end of the triangle, suggesting an boost in volatility few bars later. The next bar will be a consolidation.

MACD will move towards zero-level in the next week. We have too keep an eye on whether it will breakout or breakdown. This determines how the index would move in the next few weeks or even months.

I will analyze VIX tomorrow.