However, at the end of last week, there was another earthquake in Japan which, though, did not impact the market much. Yesterday it was announced that China reported trade deficit, first in seven years, due to the great boost in imports. Such number can be treated as bad to the economy as it indicates lower GDP and output. So it is more likely that China markets would have a negative reaction.
How would Hong Kong market react?
Daily chart of HSI:
After the consecutive rise last week, the index broke the purple down-trend resistance, which was also identified last Monday.
In short-term, we could expect that there won't be a large slump, or it may further rise. On daily chart, 25,000 would be a significant resistance level as it is the previous high.
However, MACD is at high level, lowering the bullish momentum. There might be consolidation, but more hints can be found on weekly chart.
Weekly chart of HSI:
The purple line as well as the 25,000 resistance line is exactly the same ones as that on daily chart. But on weekly chart, we could easily find one more trend-line, shown in red.
This trend-line has actually been identified for over a month. Since around February 2011, the index had broken down this support line, and was not able to get back above it.
Now, HSI reaches this red line again. This time the line is acting as a resistance, stopping the index from climbing further.
Having supported the index for over five times, this trend-line could be treated as an extremely strong one. Therefore, I anticipate that HSI this week cannot break this line; hence, coming week would be a consolidation/dropping week.
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