Hang Seng Index did well last week too. It opened at 17,853, reached as high as 18,758 and closed at 18,501.
After the meeting of finance ministers and central bankers from G20 economies in Paris in past weekend, it sounds pretty optimistic regarding helping Europe get out of trouble. Stock markets would probably surge due to this good news today.
Let's see how HSI would move this week.
Daily chart of HSI:
Apparently, the short-term Pitchfork is not a strong resistant after the index falling too low. It now becomes a support but I believe we can hardly use it again.
Hang Seng Index reached the red downward trend line on last Thursday. This line successfully resisted the index and so the index could not rise higher on Friday.
Apart from the red trend-line, around 18,700 is also 38.2% fibonacci level. Going back a bit, we can see that HSI's movement was restricted by this level for a several. We couldn't ignore the power of this level.
Therefore, on daily chart, it suggests a drop in HSI this week. Probably the index would reach around 17,750 which is 10-day Simple Moving Average as well as 23.6% retracement level.
However, if the index breaks 18,700, we could not see good resistant forces in short-term. It may be able to climb up to over 20,000.
Weekly chart of HSI:
I did put the orange Pitchfork last week on weekly chart and claimed that 18,000 would be a strong resistant to the index. So it appeared that I was wrong, and the index just broke this level without any difficulty.
For this week, if the index is moving lower, the support would be at around 17,800 which is provided by both the 61.8% retracement level and the Pitchfork.
Upside would be limited at around 19,500. If HSI reaches this level, it is more likely to slump and consolidate.
These are some levels that we should be aware of. Looking at the bigger picture, I would carry a good view on the index for this week. It could reach around 19,500.
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