Hang Seng Index today is quite likely to gain. So it means that the week's HSI was trading above the 50% retracement level as well as the Pitchfork on weekly chart. Will be back to it on next Monday.
Today will be one of my regular analysis: volatility.
Above is the daily chart of Volatility Index (.VIX). The index is still within the large red trading range after the false breakdown last Friday.
Indeed, if we draw another uptrend line, we can see that last Friday's candlestick was actually supported by this uptrend line, produced using the two troughs at the beginning of the bullish trend.
So it is confirmed to be a false breakdown. But how would the index move next?
Yesterday, a candlestick with very long upper shadow was formed. This indicates that the "buying force" is more or less weakening.
The purple downtrend line shows that VIX is forming lowering peaks (except highest one in late September to early October).
If you have been reading my blog, you probably know that I am quite bearish on volatility. The long-shadow candlestick further enhances my view.
But one concern is that there is a bullish cross, this is kind of scary to me. We have to see whether it would become a whipsaw or not.
Support is given by both the lower boundary of red channel and the green uptrend line, at around 29.20 - 30.
Resistant is at around 36.9, and next one is at around 44. If it happens then there must be something happened in Europe like having no conclusion on rescue plan.
Good luck.
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