Bearish week (2011-07-18 HSI analysis)

Filled with lots of bad news and scandals, global investors were not looking too good on the stock markets. Italian bonds rose greatly due to concerns on financial debt problems. US was talking about raising debt ceilings. Regarding these, it is more likely that stock markets this week would not be too bullish.

Daily chart of Hang Seng Index (HSI):


HSI was still in the middle of the red and green lines, showing no breaking pattern. I have drawn a few down-trend lines that possibly affect the movement of the index.

For the downside, the green down-trend line will help support HSI at the level of around 21,400. Once this support breaks, the next support would be so far away, possibly at around 20,500.

For the upside, the red lines are all resistances. A short-term one is found at around 22,350. Then 22,500 will be a very strong one (that's why I drew the line in solid).

MACD is moving downwards below zero, but it is still not too negative, it doesn't provide much information.

Weekly chart of HSI:


The red and green lines are the same as those on daily chart. Besides that, a pitchfork was used to predict the movements.

Other than 22,500 as predicted using red down-trend on daily chart, the upper line of pitchfork at around 22,900 is treated as an extremely strong resistance to the index. Once break, HSI could surge greatly.

Last week, HSI was well supported by the green down-trend line. If this line breaks, then we can expect another strong support at 21,000, provided by the lower line of pitchfork.

To conclude, given the bad conditions and investing environment, I carry a more bearish view on the index this week. 21,000 is a strong support so there should be a bounce at that level.