How about this week? (2011-08-15 HSI analysis)

Last week was another horrible week. While we might think Hang Seng Index could rebound at 20,000, it just lost another 1,200 points on Monday. Then the index moved up and down fluctuating in the remaining of the week, confusing us about what would happen next.

So, after two-day of calm-down period, let's find out something from the charts.

Daily chart of HSI:


After falling to 18,868 on Monday, which was the 2-year low, there was a little support to the index. Obviously, there was not much buying force which would otherwise have brought HSI back above the red down-trend line.

Indeed, the red solid line acted well as a resistant on Friday and that HSI could hardly surge higher.

However, with the increasing volume last week, I think that this red line is getting weaker and HSI would break it this week.

The next resistant is shown by the dotted red line (the lower one). The level is at around 20,900 shown on daily chart. (Later I will show that there is a little discrepancy on weekly chart).

For the downside, we will check it out on weekly chart.

Weekly chart of HSI:


Same as that drawn last week, the purple pitchfork did give us hints about how much the index would fall. The support by the fork at around 19000 was undeniably a predictable one.

The week, this support level drops to around 18,600. So for downside, we can expect a strong buying force at 18,600, which is around 1,000 points from now.

The red solid line is the same one, there is a weak short-term resistant at around 19,750.

For the next red line, I have moved it a little bit so it was not the exactly same one as that on daily chart. As a result, we can see that the resistance level shown on weekly chart is 21,100 instead of 20,900.

Although this is not a very big difference, we should treat it as a resistant zone at this area rather than just looking at one of the two levels.

So far, the economic data coming out this week seems to be quite positive. There shouldn't be many excuses for global stock markets to plunge. VIX is getting lower and the markets will be less volatile. I would be expecting a bullish market this week. So watch out the levels 19,750, 20,900-21,100 (though I don't think it could reach 21,000 given the falling volatility).