Hang Seng T.A.
Hang Seng Technicals
The recent rally in Chinese equities was caused by hopes of stimulus in China as well as bullish equity markets in other countries. Things were looking very promising for chinese equities. But the chinese government stimulus lacked luster, so the current rally has fizzled out. So what is next for chinese equities?
Long-Term Trend
The current long-term outlook for the Hand Seng index is barish. You can see the long-term trend in the picture below.
The price of the Hang Seng Index has not been able to get above this long-term downward trending resistance. It will be a strong bearish trend until the price can rise above the long-term resistance seen below.
Based on the long-term trend you might want to the cauthis. I'm going long until there is a bottoming pattern that has formed.
Short-Term Trend
With a closer look at the daily candles, you can see the current short-term price channel. It shows a clear downtrend. The price action has sharply rejected the resistance level of this price channel after the recent strong rally.
From a technical standpoint, you might expect the price to return to support of this short-term price channel.
Fridays close on the index occurred near a previous low. Areas like this can be used as minor support levels. If the price does not bounce here, then I might have more confidence that the price action will return to the downward trending support level.
In the chart below, you can see several major support /resistance levels where you may find buyers or sellers stepping in. If there is a bounce in price action then it will likely happen near a major resistance level.
Bullish, or No?
Economic data in China continues to disappoint investors. Stimulus measures in China are not providing enough confidence to investors.
Fundamentally speaking, I personally think that China might be a very good investment to hold for a very long-term investment. But lately, the picture for chinese equities has looked more and more grim.
Ultra Long-Term Trend
You can see the ultra long-term picture in the chart below. You can also see how the current downturn in price action has dipped below a very long-term support level. The price has also dipped below previous lows on the quarterly candles. This is very bearish looking.
Before you can even consider that a possible uptrend is forming, you must at least see a higher low forming in the price action on the chart. Technically, this has not happened yet on the monthly candles as seen below.
The price action on the monthly candles continues to produce lower highs and lower lows. This is indicative of a downtrend.
Conclusion
Until economic data in China turns positive, or until the Chinese Central Bank releases a massive stimulus regime, then I would find it difficult to go long on short-term or mid-term swing trades.
It is obvious that the the price of the Hang Seng Index has been beaten down so much over the past couple of years. This will only make the rally stronger when the chinese economy finally turns around.
As always, this is not investment advice. Good luck trading. Be careful and be patient. Give your investments time. Don't be greedy. Don't invest in anything you don't understand. Don't put all of your eggs in one basket. Don't listen to the hype. Don't fomo or panic into or out of trades. And just follow the trends. A trend is your friend.
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SpyderCallOP : @102640653 I have been waiting so long for chinese markets to rebound. Hopefully very soon
102640653 : I hope so that last Friday was a pullback. There has been large volume of accumulation in Alibaba, Tencent, jd, byd, nio. N some Chinese etf. In the past 2 weeks . I am looking at positive signs forming. U may be able to catch the Low . That’s what I see now. These levels r very interesting. Good luck.
Norton Symantec : Thanks for your wonderful update. Welcome back, long time didn't hear you
SpyderCallOP Norton Symantec: I went awol for a bit there. I appreciate the warm welcome
70110526 : It would be nice if the national games were over, like Japan's 30 years after 1992
SpyderCallOP 70110526: LOL! I know right. It only took Japan a few decades to make new highs.
SpyderCallOP 102640653: Check it out. So far, there is a small bounce off of the support level I mentioned. I don't know how long this uptick will last, but it is a swift rise so far during intraday trading. It has not been very long, but that bounce looks promising so far
SpyderCallOP Norton Symantec: if the hang sang index holds this bullishness, then it looks like this new trend will be confirmed. Very strong start to the week.