The offering tonight is essentially an update to the HSI technical analysis at the bottom of this (very) long post. All charts in this post courtesy of CMC Markets.
Some lines are snapped into place, trend crosses and breaks are still valid, the 1000 + N(2000) S/R levels are intact, and moreover we have continued states of play on the trends, which have separated quite a bit from the last time we checked in with them. We are still going to see some pretty strong falling trend resistance just shy of 22 000, which is currently the big battle lines over the next ~2 weeks given the strong rejection three weeks prior, as well as the extremely low volume these days. Do not expect anything to happen here before the end of next week, and it’s doubtful even after that.
We are into some pretty good tiger stripe territory, so do expect to see a strong possible rally if we do break 22 000, most likely swiftly into the 23 000 – 23 500 level for further 1-2 month consolidation in accordance with previous volatility technical analysis. Don’t be “pure” in the market when that hits. However, we have after hitting the upper falling trend line moved to see the strongest rising one above market price action, doesn’t that mean that we should try to “cut and run” before all the resistances line up against us?
I commend that analysis. It’s good, and it’s probably smart given current market risks. However, it’s risk-on most of the days and the market has levitated on low volume in Hong Kong. That ends in one of two ways: 1) parabolic volume runs, or 2) merciless margin call cascades. Given the problem of attempting to place money somewhere and China’s green shoots and smooth if not uber-reformist handover, plus extreme amounts of easing, easing everywhere, it hurts to go against the grain. If you believe that all ills will be fought by smothering via printed currency, you might want to take a look at the micro-view. the trend lines drawn here are even more aggressive than the steep upwards one above, simply because they have not been in play for a significant amount of time on that scale.
Yesterday, three things happened on this chart:
- Engulfing bullish candle with strong rejecting wick on the downside.
- Cross of the monthly EMA.
- ADX/DMI going positive.
- Bottom for the MACD.
- Second rejection of a trendline cross…
- … and two doji’s marking the bottom.
- All with high volume.
No wonder the market went up today! If the HSI breaks with this development, it still has the steep trend to contend with as shown in the first chart in this post. Bulls have a fence to lean against! And today, the market did a near replica of the candle shape you see here (open candle, small upside wick and large downside ditto) testing and rejecting the top of the last candle you see here, still on good volume and pushing up towards 21 800.
The volatility traders didn’t seem to know what they’re doing either, luckily someone stepped in heavily at 16.6% (21 SMA + 0.4%) and made them realize the folly of their ways. They promptly returned to selling volatility so that you and me can buy it within a few months at steep discounts. Thanks, whoever did this!
Bulls, you’re up!