Daily chart of HSI:
Due to the ease of debt concerns in Greece, and some excellent profits announced by large companies like Apple, HSI surged. The rise stopped at the red down-trend line.
Reaching this level, the index is more likely to fall again as there are no signs of extremely good news popping up this week.
In fact, some important economic data will be revealed, and so far the experts did not have positive expectation on such data.
For example, UK GDP (QoQ) announced on Tuesday is expected to have dropped compared to that last time. Such bad news will definitely pull the stock markets down.
US Durable Goods Orders and US GDP announced on Wednesday and Friday are other examples that should keep dragging global indexes to lower levels.
Together with the analysis on VIX last week which showed that the volatility should surge again this week, we can conclude that this week's HSI should be bearish.
Green line is the support, which is currently at around 21,300. This is expected to be the first stop of plunged of HSI.
Weekly chart of HSI:
The green line is obviously that one on daily chart, and the next support is 21,000 given by the middle line of pitchfork.
One more support that worth talking about is the fibonacci level. Taking the orange flag into consideration, I applied a fibonacci projection using the high and low which first touched the two lines, and the 0% was set on last level that touched the orange line before breakout.
Interestingly, the 100% was exactly at the high in late 2010. 23.6% appeared to be a strong support to the HSI currently. 0%, which is at around 20,800, will definitely be another support. So the index will face huge buying power at 20,800 - 21,300.
If HSI slumps, we can expect it to reach around 21,000. So my thought about this week's Hong Kong market is around 1,400 points down.
Watch out guys.
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