Yesterday US markets plunged hardly after the release of poor jobs number, with the major US index dropping over 1.0%. Most likely Asian market would follow this slump at the opening today.
Another important data that probably influences Hong Kong market would be China's real GDP on Friday, which is expected to have slight decrease. Movements in China market will have impact on that in Hong Kong market.
Let's see this week's Hang Seng Index (HSI).
Daily chart of HSI:
Before the holiday, the index was not fluctuating greatly. It moved pretty much side-way. One point that's worth noting is that the index dropped and stayed below 21,000. So this level becomes a resistant to the index.
On the chart, I identified another short-term down-trend resistant, shown in red, to the index. It is not supposed to have very strong power, but still it gives us hints.
In fact, the index has reached the medium-term up-trend support, shown in green. This is going to be a fight between breaking out or breaking down.
Given the poor US market yesterday, breaking down is more likely. 20,150 gives a weak support, but if a break down is confirmed, this level won't hold long.
Let's see weekly chart for more clues.
Weekly chart of HSI:
On weekly chart it looks more like bullish; but we can still find out the support if the bearish movement is assumed on daily chart.
We can see that 50-week SMA is currently supporting the index. If break down occurs, this level will no longer be a valid support.
Instead, Ichimoku cloud is quite thick. Combining with fibonacci levels, we can estimate a strong support at 19,300-19,500. This means that potentially the index could drop 1,000 points.
This is quite a big slump but it's not impossible technically, as we can't see other major supports in between.
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