Slightly more bullish view (2011-11-14 HSI analysis)

Last week there was a huge concern about Europe. Italy's Prime Minister Silvio Berlusconi resigned and a new government is being formed, led by Mario Monti. We'll soon know what they would implement to save the country and the whole EU.

Because of the sudden jump in Italian bond's yield last week, Hang Seng Index plunged over 5% on Thursday, reaching below 19,000. We can see there is really large volatility.

Let's see how this week will go.

Daily chart of Hang Seng Index (.HSI):















Again, not much clues from Daily chart. The most important thing was that the index broke down the short-term up-trend line last week.

We can expect a short-term bearish trend to the index. We might see it go back to some where around 17000.

In addition, MACD and EMA showed a potential bearish cross. But they still haven't crossed, so we need some more time to confirm.

While daily chart doesn't tell much, let's move on to weekly chart to find any good supports or resistances.

Weekly chart of HSI:















It looks clearer on weekly chart due to the many noises these days led by the fluctuating news. The index is still sliding gradually within the purple Pitchfork.

Indeed, last week it was well supported by the middle line of Pitchfork. This is a good sign showing that HSI is not that bad. It should rebound.

But where could it go up to? We can observe that 20-week Simple Moving Average resisted the index three times in a row. Therefore, we can still expect a resistant level at around 20300 given by this SMA.

If the index breaks downwards, the support is at around 17,900, 50% retracement level.

All in all, I think the middle line is pretty strong at the moment and is supporting the index greatly. This week the index should be moving upwards.

And this week will be dominated by the economic data, including GDP in Japan and Europe, as well as CPI in UK and US. On top of that, we have to be extremely careful with any breaking news from Europe.