Bounce this week (2011-06-20 HSI analysis)

Hello everyone. Last week was a disaster for the world's stock markets, with most of the indexes dropped severely. HSI plunged from 22420 to 21695, which was over 3% drop. Financial concerns in Europe appeared to be the reason behind, but Euros and Pounds were able to recover quite a lot from slump last Friday.

So this week's movement depends on whether HSI would find its ground like what DJI and FTSE did last Friday. Let's see the charts below.

Daily chart of HSI:


On the daily chart of HSI, it is obvious that the index breaks below the red down-trend line. This indicates weakening of the index, and may turn into bearish trend if the break down confirms.

Good news is that volume did surge a bit, saying that investors were having positive view on the market. MACD reached its support line too, it would probably bounce.

Green dotted line is the previous down-trend line which provides support, though its far away.

Weekly chart of HSI:


On the above chart, we can see that HSI was well supported above the red down-trend line. This was the level I mentioned last week.

Also, the index slumped below the lower bound of bollinger bands. There would be a strong buying force pushing the index upwards.

Volatility will undoubtedly rise this week. This can be shown by the convergence of 20 and 50 SMA, by historical evidences. And it is more likely that the vol would lead HSI upwards.

Short term resistance is at 22,300, and the index should fall again after reaching the resistance.

Good luck.