Trading near sensitive area!

China HangSeng(15460) Near Term Trend:Turning Negative!

I said "Watch 14.7k, a break below (on close basis) will lead to shallow down move, may be towards 14.2k -13.5k in the next few trading sessions,On the upside 15.3k is a next hurdle". Since then we had seen index moving in a choppy range of 14.7k to 15.7k; although it has surpassed the important hurdle of 15.3k, I am skeptical about sustainable up move, from here onward. In fact, I am maintaining my original view of "sell" on break of 14.7k, intact. Here is why.The current up move (from 11814) is a "corrective" rally rather than "impulsive" move (lack of faster retracement of previous fall is the main reason). The rise is well supported by the rising trendline (blue), however a downward break can lead to serious setback for the bulls. Value of the trendline for the next 2 days is 15287 & 15469; in short before 14.7k these two values should be treated as protection for the longs, if any.See the inlaid daily -close- chart. In the recent past, the bulls & bears had encountered many furious battles for the control of 14750 (few odd points here & there). Therefore now a move/close below 14750, say 14.7k, will lead to shift in the control of the markets, once again, into bears hand. If one could assume the scenario of breaking 14.7k, immediately, then the H&S reversal pattern will emerge, with a potential of sharp downward correction. Normally, such a small / hidden H&S pattern always cause serious destruction for the bulls. However, if the rally continues , from here onwards, then we could see 17k in the immediate near term. Lets see how the things unfolds.

Watch 14.7k!

China HangSeng(14753) Near Term Trend:Positive

I said"although the index has seen a positive movement (since 11.8k) as per expectations, the anticipated 'ending' triangle could turned out to be a 'expanding' triangle, thereby keeping the possibility of retesting of Oct lows open; on the upside a weekly close above 14.3k will lead to change in the opinion".

We have seen Index moving upwards (>14.3k) in the initial trading sessions of the current week. The bulls had, indeed, made an strong comeback & avoided unfolding of the expanding triangle scenario. However, in the extreme short term, watch 14.7k, a break below (on close basis) will lead to shallow down move, may be towards 14.2k -13.5k in the next few trading sessions, a good buying opportunity for the medium term. On the upside 15.3k is a next hurdle (on close basis).See the inlaid weekly close chart, the index had formed classic double bottom reversal pattern near 12.6k mark (12618 for the week ending 24th Oct and 12659 for the week ending 21st Nov- tolerance of less than 0.5%). If able to protect this double bottom, the index can lead to significant recovery as far as medium to long term trend is concerned. Remember that 12.6k is slightly below the quarterly threshold level (explained elsewhere) and the bulls need a strong comeback above 13.9k by the quarter end i.e. Dec 2008. In that sense the positioning of this 'reversal' pattern is such that it can provide a much required 'firepower' for the bulls to sustain/stay above 13.9k by the year end. Will it be able to do that? I think so...lets see who the index evolves in the next few weeks.

HangSeng ..suspected expanding triangle..

China-HangSeng(12815) Near term trend:Negative I said "I am expecting a pause in the uptrend with suspecting" ending" triangle formation where "b" leg is likely to be ended near 14.6/14.7k and "c" leg will open downward with target price of 12300-11650; which can provide excellent opportunity to buy for a medium term rise".

HangSeng moved down exactly as per expectation. However an anticipated "ending" triangle is likely to be turned out as "expanding" triangle which may lead to a serious downfall , may be retesting of previous lows. On the upside, a weekly close above 14.3k will compel us to abandon the 'bearish' view on the index.

HangSeng-Swift down move on cards!

China - Hang Seng 14375 Near term trend: Sideways.

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).

Hongkong Bulls : Where are you guys...??

China- HangSeng (13760):

Near term Trend : Bearish (Pending reversal) The Hangseng lost almost 58% since Nov07(not a big deal...everyone lost). See the inlaid quarterly chart.In December 1987 the index was at 2086. In a subsequent roaring bull market the index went up & peaked at 27254 in December 2007. This entire rise (20 years) was within the perfect rising parallel channel ( & not random). For the current quarter i,e, December 2008 (again December - coincidence or time cycle) the lower end (of parallel channel) value - i.e. likely support - is 13403. And today's (23rd Oct) low tick is 13403. Now the next important point; 0.618% retracement value of the entire rise from 1987 to 2007 is 13497. Today's low tick is 13403. Now see the daily chart (above). Latest price action shows "contracting" tendency; i.e. both rallies and falls are getting smaller than immediately preceding rise/fall. This is probably a good "accumulation" pattern. But needs bullish confirmation with quick price move above 15325-15425. In nutshell, the bulls are at important time & price cycles, a decisive action from "bulls" camp will confirm the "beginning" of the end....at least in short to medium term.