Act-fast Week (2012-03-12 HSI analysis)

Last week, probably the biggest news was that most of the Greece debt holders agree to the swap suggested, and this is probably a good news to the market since the default date of Greece is somehow delayed. Hang Seng index surged for three consecutive days since last Wednesday.

This week, we have to be aware of the speech by FOMC this coming Tuesday morning (which will affect Hong Kong market on Wednesday), and the speech by Bernanke on Wednesday night (which will affect Hong Kong market on Thursday).

Gold price rebounded after being supported by 200-day SMA at around 1675 and closed above 1700. The crazy plunge in gold price should stop at least for this week.

OK let's get back to our weekly analysis on HSI.

Daily chart of HSI:

We can see that after staying within the range 21,000 - 21,600 for two weeks, the index finally broke down this zone on last Wednesday. On Friday, it attempted to get back above the lower boundary, and it finally closed slightly above 21,000.

Therefore, we would have to see whether the index could close within this range today. If so, the index is still be considered under (short) bullish trend. And that it will test again 21,600 for the third time, which is traditionally a good time for break out, with target of 23,700.

If the index plunges instead, the strength for surging has come to an end and we anticipate plunges this week. Support zone is at around 20,300 given by the 50-day Simple Moving Average. Ichimoku cloud gives support at near this level on after Wednesday this week.

Given the break out of the orange flag in January, if the index reaches 20,300 support zone and we see strong buying power there, it might be a good chance for us to buy some shares to catch the next bullish wave.

Weekly chart of HSI:

On weekly chart, we can see that last week it was supported by the 10-week Simple Moving Average, and then it rebounded and closed slight above 21,000.

The index is still inside the Ichimoku cloud. The upper bound of the cloud this week is 21,500. Therefore, if HSI could break out 21,600, even on weekly chart it will have a bullish trend, and that chance of its heading towards 23,700 is big.

If it slumps instead, the Moving Average still acts as a support, but it is expected to be a much weaker one compared to last week. There is no obvious support on weekly chart, so the support on daily chart will be taken as reference instead.

So get prepared to act on what you see this week.