We’re one hour into trading, and the HSI started by dropping 1+% and has since dropped below the 19 000 big figure, taking the fall in actual trading over 1%, cumulating to -2.4%. On top of this, the Tokyo bourses are closed and will ikely hem in potential gains tomorrow. I’m looking at an attack of last weeks’ low towards 18 800 on Wednesday where the huge pinbar rejection came in, but here’s why that might not work particularly well for long entries:
That pinbar was formed on speculation that the euro was supported by Chinese money, and then that central banks helped provide US$ liquidity to the market simply added to the rally as the collapse of euro-banks was less imminent. Given this weekends Polish parliame- sorry, summit! and the conclusion that the eurozone will take the decisive action of sticking to it’s July 21 agreement after some additional review to see if Greece has lived up to its obligations. Translation: less than nothing, we can’t even agree to the terms of decisions made previously, and we will let Greece suffer counterproductive policies because we have our house in about the same order as they do. In the meantime, George Papandreou has to cancel time in the US to attend to crisis measures, which consist of emphatically underlining just how fine everything is back home in Greece. Spot the paradox! Fittingly, the euro is trading down 1% (!) this morning, but expect more, and a new serious attack of the US$ 1.35 level within the week.
I’d use any bounce in the HSI above 19 000, or intraday downwards turning point above 18 800 (after a touch there) to go short.