Chance for breakout ? (2012-03-05 HSI analysis)

Missing last week's stock markets seems not to be a big regret, with the indexes moving sideways due to different news announced each day.

Hang Seng Index was basically moving within the range 21,000 - 21,600 and it could not break the strong resistant at 21,600. However, given that the index did not immediately plunge after reaching this upper boundary, we have to further investigate that whether it could break out.

Gold experienced a sudden slump on 29 Feb, dropping over $100 on one single trading day. It got supported at around 1680 where the Moving Averages lie.

Daily chart of HSI:

As trend-lines and Fibonacci levels could not give much hints about the index, I have added the Ichimoku indicators on the chart, though it does not look too useful on this chart either.

HSI is still within the two horizontal lines ranged from 21,000 to 21,600. It is consolidating at this area which I treated as a strong resistant area before.

However, normally if there is strong resistant force, the index would fall immediately after reaching this zone. This is obviously not the case here.

Therefore, we will have to further observe whether the index has gained enough strength to break out this level. To confirm break out we would need breaking volume for confirmation as well. It might happen this week.

Weekly chart of HSI:

Ichimoku on weekly chart seems to be more meaningful. The index is currently within the cloud and has reached the top boundary of the cloud.

The current cloud is a very narrow one, breaking it seems to be possible. But again, we will have to confirm it during its breakout.

If breakout is confirmed, it will continues its surge to around 22,900 and previous high at around 24,200. This would mean another 1500-2500 points rocket.

If it is resisted and starts dropping, it would move towards 20,000.

So this is another critical week.