Important levels (2011-05-27 HSBC 0005.HK analysis)

Hang Seng Index surged over 150 points yesterday, closing at above 22,900. That means on weekly chart, the index was still within the triangle, and above the horizontal resistance, which might turn to support again.

Today let's see how the biggest component of HSI, HSBC (0005.HK), would move in order to predict how the index would go at the end of this week.



Above is the daily chart of HSBC (0005.HK). After reaching the support zone at 78.0-78.9, the stock price bounced yesterday.

There are two down-trend lines: red one indicates a short-term trend and purple is a medium-term trend.

HSBC is still below these two lines, meaning that they would both act as resistance to the stock price.

The red one gives resistance at around 80.70 and purple at around 81.80. However, we can anticipate that the selling force at 80.70 would not be that powerful as the short-term down-trend was too rapid and the slope is too steep.

Volume jumped, which was a good news to the stock market. It has a great chance to rise to at least the resistance level at 81.8.

So be aware of these levels: 78.0-78.9 and 80.7,81.80 which are major supports and resistances.