Finally I can have some time for the financial markets, after a week of three exams.
Last week doesn't seem to be a big week, with the markets mostly moving sideways. However, this might be a sign telling us that big waves are coming.
As shown in last thread, there will be numerous important economic data coming out this week, including GDPs, unemployment rates, retail sales and rate decisions. It is still hard to say whether these news would make the market fluctuate or they would simply push it towards one side.
Let's see this week's Hang Seng Index (HSI).
Daily chart of HSI:
These two months were pretty much a sideways movement after the crazy surge in Jan and Feb after breakout of the flag. The Fibonacci projection is applied to estimate the target suggested by the flag breakout, which is almost 24,000.
As we can see, the index is currently converging, giving a flag shape. Though it can be drawn as a down-trend channel, it looks like more appropriate to draw flag given the short up-trend line these two weeks.
If the index breaks down of this channel, the chart would be revised as a down-trend channel to get the support level.
But if it is really a flag, it appears to be a bullish continuation flag given the previous breakout. The implication is simple: continue to rise. Therefore, if breakout confirms, it would break also the previous high at 21600 and head towards 22100.
Weekly chart of HSI:
Ichimoku wasn't drawn this time to give a clearer chart as it does not give us much hints. As we can see, on this chart it looks better if a down-trend channel is used, instead of a flag. However, with such a long-term chart, it does not have very strong power.
Recently HSI tried to break out of Moving Averages but failed a few times. However, each time it was supported by the lower MAs so it was not plunging to hard.
This week looks pretty bullish as suggested by the charts. But risk is still high if we cannot confirm a break out. I would suggest that if the index breakouts the flag, we can long only a few positions. Then raise if the breakout is confirmed.
Otherwise, just stop and observe for another week if breakout doesn't happen.
Last week doesn't seem to be a big week, with the markets mostly moving sideways. However, this might be a sign telling us that big waves are coming.
As shown in last thread, there will be numerous important economic data coming out this week, including GDPs, unemployment rates, retail sales and rate decisions. It is still hard to say whether these news would make the market fluctuate or they would simply push it towards one side.
Let's see this week's Hang Seng Index (HSI).
Daily chart of HSI:
These two months were pretty much a sideways movement after the crazy surge in Jan and Feb after breakout of the flag. The Fibonacci projection is applied to estimate the target suggested by the flag breakout, which is almost 24,000.
As we can see, the index is currently converging, giving a flag shape. Though it can be drawn as a down-trend channel, it looks like more appropriate to draw flag given the short up-trend line these two weeks.
If the index breaks down of this channel, the chart would be revised as a down-trend channel to get the support level.
But if it is really a flag, it appears to be a bullish continuation flag given the previous breakout. The implication is simple: continue to rise. Therefore, if breakout confirms, it would break also the previous high at 21600 and head towards 22100.
Weekly chart of HSI:
Ichimoku wasn't drawn this time to give a clearer chart as it does not give us much hints. As we can see, on this chart it looks better if a down-trend channel is used, instead of a flag. However, with such a long-term chart, it does not have very strong power.
Recently HSI tried to break out of Moving Averages but failed a few times. However, each time it was supported by the lower MAs so it was not plunging to hard.
This week looks pretty bullish as suggested by the charts. But risk is still high if we cannot confirm a break out. I would suggest that if the index breakouts the flag, we can long only a few positions. Then raise if the breakout is confirmed.
Otherwise, just stop and observe for another week if breakout doesn't happen.
