Can the Hang Seng cobble together a sympathy bounce?
Whilst the overall trend and sentiment point lower, yesterday’s false break of support could provide a potential bounce for the Hang Seng index.
Despite its downtrend on the daily chart, the HSI produced a strong bullish engulfing candle on the 25th of August which showed strong demand around 19,200 – a level which has held since May (and a similar candle occurred). Whilst it printed a bearish pinbar and then fell back below 20,000, the fact it took 6 days to unwind the gains of the engulfing candle can be seen as a form of strength.
Also note that we saw a false break of the 19,200 support area yesterday despite the negative sentiment, and the day closed with a bullish hammer. Furthermore, the hammer formed and closed above key support and the weekly S1 pivot point, and a bullish divergence formed on the RSI.
The near-term bias remains bullish above yesterday’s low and for a move back to the 20-bar eMA, or weekly pivot point. Whereas a break beneath yesterday’s low (or daily close) assumes its next leg lower has begun and brings the 18,400 region into focus.
Despite its downtrend on the daily chart, the HSI produced a strong bullish engulfing candle on the 25th of August which showed strong demand around 19,200 – a level which has held since May (and a similar candle occurred). Whilst it printed a bearish pinbar and then fell back below 20,000, the fact it took 6 days to unwind the gains of the engulfing candle can be seen as a form of strength.
Also note that we saw a false break of the 19,200 support area yesterday despite the negative sentiment, and the day closed with a bullish hammer. Furthermore, the hammer formed and closed above key support and the weekly S1 pivot point, and a bullish divergence formed on the RSI.
The near-term bias remains bullish above yesterday’s low and for a move back to the 20-bar eMA, or weekly pivot point. Whereas a break beneath yesterday’s low (or daily close) assumes its next leg lower has begun and brings the 18,400 region into focus.