Hong Kong Hang Seng Index Analysis

The initial upside target of 20,000 mentioned in the last Hang Seng Index notes has been achieved. The best way to look at the Hang Seng is to use a weekly chart. The long term resistance level is near 21,000. There are no technical barriers to the rise from 15500 although a weekly flag pattern did develop. This is not a clear flag pattern, but it can be used to confirm the upside targets of 21000.



The upside targets were established using the trading band behaviour of the Hang Seng. The width of the trading band is used to calculate potential downside and upside targets. A breakout above 15500 gives an upside target near 20,000. This is near to historical support and resistance near 21,000. The market has moved quickly to these levels so the is a higher probability of a significant retreat once resistance near 20,000 to 21,000 level is achieved.

Traders will look for loss of momentum and consolidation within this resistance band.
A move beyond 21000 has an upside resistance target of 23500. This is based on the upper level of the left hand shoulder pattern that was part of the longer term head and shoulder pattern. This strong trend is underpinned by the growth in the Chinese economy so traders will also watch the Shanghai Index for indications of weakness which will transfer to the Hang Seng.

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Article contributed by Private Trader, Market Expert, Trading Coach and Best-Selling Author Mr. Daryl Guppy. For more articles and commentaries from Daryl Guppy, click HERE.