Last week was not a good week to many investors, with quite a lot of negative news. There might be even more regulations to investment banks on their risk management after the great loss by JP Morgan.
Hang Seng Index (HSI) plunged hardly last week, breaking down and closing below 20,000 first time this year after breaking out this level in early January.
There will be quite a lot of economic data revealed this week, including GDPs from several countries especially Italy and Spain, and CPIs from several countries too. We can expect that the market would be greatly affected on Italy and Spain GDP figures, which are expected to be worse than previous figures (but keep in mind that how the market moves depends on whether the real number beats or is beaten by the estimation, not just the data itself).
Let's see how this week will go.
Daily chart of HSI:
The index broke down the medium-term up-trend support line shown in orange, as well as the 23.8% Fibonacci projection level. This is definitely not a good sign.
There is a shorter term down-trend line which might give a bit support at around 19,600. HSI will probably rebound after reaching this level.
Other than these, the only things we can see from the chart would be a widening trading range, with the current resistant at around 20,400. Is it telling us that there would be a larger volatility? Possibly.
Weekly chart of HSI:
On weekly chart, we can see a dramatic breakdown after the index attempted to break out the two Simple Moving Averages (10-week and 20-week). Whether it is a break down or not will depend on how it goes in the coming two weeks. In my opinion it won't break down straight away.
One good thing is that there is a support at 19,600 given by the Fibonacci retracement level. This is the same as that on daily chart and we could expect strong support here.
So if the index reaches 19,600, it would be a good chance to long and wait for rebound. If it rises above 50-week SMA at 20,100, we can even add more long positions. But you have to be mentally and physically ready for huge movements.
Hang Seng Index (HSI) plunged hardly last week, breaking down and closing below 20,000 first time this year after breaking out this level in early January.
There will be quite a lot of economic data revealed this week, including GDPs from several countries especially Italy and Spain, and CPIs from several countries too. We can expect that the market would be greatly affected on Italy and Spain GDP figures, which are expected to be worse than previous figures (but keep in mind that how the market moves depends on whether the real number beats or is beaten by the estimation, not just the data itself).
Let's see how this week will go.
Daily chart of HSI:
The index broke down the medium-term up-trend support line shown in orange, as well as the 23.8% Fibonacci projection level. This is definitely not a good sign.
There is a shorter term down-trend line which might give a bit support at around 19,600. HSI will probably rebound after reaching this level.
Other than these, the only things we can see from the chart would be a widening trading range, with the current resistant at around 20,400. Is it telling us that there would be a larger volatility? Possibly.
Weekly chart of HSI:
On weekly chart, we can see a dramatic breakdown after the index attempted to break out the two Simple Moving Averages (10-week and 20-week). Whether it is a break down or not will depend on how it goes in the coming two weeks. In my opinion it won't break down straight away.
One good thing is that there is a support at 19,600 given by the Fibonacci retracement level. This is the same as that on daily chart and we could expect strong support here.
So if the index reaches 19,600, it would be a good chance to long and wait for rebound. If it rises above 50-week SMA at 20,100, we can even add more long positions. But you have to be mentally and physically ready for huge movements.
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