In the last review I had argued in favor of "possible bullish reversal" in Hang Seng based on a)20 years parallel channel support near 13k b) 0.618 Fibonacci retracement level (13k) of entire rise since 1987 & mentioned that a quick price move beyond 15325-15425 will provide required confirmation.
We had seen the Index taking support near the 13k level, as argued. However at the same time it had went below the critical level (13k) which is a normal phenomena witnessed in typical "Selling climax" where prices tends to overshoot the target with "emotional selling" pressure.
So far so good, the index recovered over 39% in just 5 trading sessions. The low of 10676 was exactly on the lower end of the parallel channel (drawn on daily charts). Subsequently this channel was broken upward confirming the much required strength in the index. However, 15325-15425 remained untouched. Further, the recent rise has given 0.618% retracement (at 14683) of the previous leg of the fall i.e. from 17141 to 10676(a leg), indicating a possibility of "pause" in the trend with suspected "triangle" formation where the current rise is "b" leg of the triangle & possibility of "c" leg opening downward.
If the "b" leg has ended near the 14.6/14.7k level, then expect a down move up to 12300-11650, which could be the "c" leg of the suspected triangle. In short the anticipated fall could be a part of "ending formation" for the entire fall (as argued based on quarterly chart) & as such can provide excellent opportunity to buy for a medium term rise ....may be till the year end(2008).
