Slight Bullish Divergence in the Hang Seng Index
Silver Lining?
The market is beginning to look more and more bearish lately. But stocks can't fall forever. Typically, after a major selloff, you could expect a slight rebound in price as short swing traders take up profit and investors buy up shares at a relative discount.
This might be what is happening in the Hang Seng Index today as we have a possible silver lining in the technical picture.
Technical Outlook
In the chart directly below, I have highlighted the major technical aspects I am paying close attention to.
Notice how the price of the index is near a major Fibonacci retracement level. In my opinion, this is the strongest potential support/resistance level within the Fibonaccis. A potential rebound, whether it be small or large, should always be considered at the major Fib levels.
The medium-term trend is highlighted in the chart below by the blue lines. Most of the price action has remained within this price channel over the past year. We should assume that the price is going to stay within this trend until it shows us otherwise.
I have highlighted the immediate or near-term trend by the red line. If any rebound does occur at this Fib level, then I must see the price climb above this immediate resistance level in order for myself to be bullish in the near-term.
If the price action rejects this near-term resistance like it has twice already within the past three weeks, then I will remain bearish until the price climbs above this red trend line.
Slight Divergence?
The only bullish aspect I can see within the technicals is the slight divergence between RSI and the price action. This slight bullish divergence indicates that the short-term downtrend is losing steam.
Is this bullish divergence a silver lining, or just the indicators cooling off before the onslaught continues? Bullish divergences are often followed by a rebound in price. But this divergence would only imply a potential short-term rebound, not a complete market rally.
Of course, there is always a possibility that this could be the 52-week low, but I will need more convincing myself.
Conclusion
So far today, the Hand Seng is looking very bullish as it climbed over 1% before lunchtime. This could be due to the technical aspects that I mentioned. There is no real way to be sure.
Personally, Im still bearish in the short - and mid-term based on the technicals in the charts. On a longer-term outlook, I like the chinese markets as an investment prospect. I am very strongly bullish going out 10 years or more.
When it comes to the chinese economy, I am not as bearish. The economy could be better, but it is not falling into recession by any means. The real estate market still has me worried, but so far, chinese investors are not running for the hills. So this tells me I should be looking for a dip to buy until I hear some more bad news.
So far, I can't see any entry points yet. I like the potential rebound off of the Fib level that I mentioned. And I like the slight bullish divergence on the daily candles. But I need to see more bullish developments in the charts or in the economic data before I can flip my sentiment to bullish.
My previous post mentioned all of the bearish signals popping up in the markets. You can check out the post in the link below.
As always, this is not investment advice. Good luck trading. Be careful and be patient. Dont anticipate the market. Rather, participate in the market. 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. Do your own due diligence. And just follow the trends. A trend is your friend.
$TENCENT (00700.HK)$ $SSE Composite Index (000001.SH)$ $CSI 300 Index (000300.SH)$ $SZSE SME 100 Index (399005.SZ)$ $FTSE Singapore Straits Time Index (.STI.SG)$ $NIO-SW (09866.HK)$ $NIO Inc. USD OV (NIO.SG)$ $NIO Inc (NIO.US)$ $BILIBILI-W (09626.HK)$ $Bilibili (BILI.US)$ $Baidu (BIDU.US)$ $BIDU-SW (09888.HK)$ $XPeng (XPEV.US)$ $Li Auto (LI.US)$ $BYD COMPANY (01211.HK)$ $BYD Company Limited (002594.SZ)$ $HSI Volatility Index (800125.HK)$ $Hang Seng Index (800000.HK)$ $Hang Seng TECH Index (800700.HK)$ $S&P/ASX 200 (.XJO.AU)$ $S&P/ASX 100 (.XTO.AU)$
$Invesco QQQ Trust (QQQ.US)$ $iShares Russell 2000 ETF (IWM.US)$ $VIX Index Futures(DEC4) (VXmain.US)$ $SPDR S&P 500 ETF (SPY.US)$ $SPDR Dow Jones Industrial Average Trust (DIA.US)$ $iShares MSCI Emerging Markets ETF (EEM.US)$ $Gold Futures(DEC4) (GCmain.US)$ $E-mini Dow Futures(DEC4) (YMmain.US)$ $E-mini S&P 500 Futures(DEC4) (ESmain.US)$ $E-mini NASDAQ 100 Futures(DEC4) (NQmain.US)$ $E-mini S&P MidCap 400 Futures(DEC4) (EMDmain.US)$ $E-mini Russell 2000 Index Futures(DEC4) (RTYmain.US)$ $CBOE Volatility S&P 500 Index (.VIX.US)$ $VIX Index Futures(DEC4) (VXmain.US)$
$Direxion Daily CSI China Internet Index Bull 2x Shares ETF (CWEB.US)$ $China Alphadex First Trust (FCA.US)$ $Wisdomtree China Ex-State-Owned Enterprises Fund (CXSE.US)$ $S&P Asia 50 Index Ishares (AIA.US)$ $KRANESHARES SSE STAR MARKET 50 INDEX ETF (KSTR.US)$ $RAYLIANT QUANTAMENTAL CHINA EQUITY ETF (RAYC.US)$ $iShares China Large-Cap ETF (FXI.US)$ $Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR.US)$ $Franklin Templeton Etf Tr Ftse China Etf (FLCH.US)$ $db X-trackers Harvest CSI 500 China A-Shares Small Cap Fund (ASHS.US)$ $iShares MSCI China ETF (MCHI.US)$ $KraneShares CSI China Internet ETF (KWEB.US)$ $KRANESHARES CICC CHINA 5G AND SEMICONDUCTOR INDEX ETF (KFVG.US)$ $Global X Funds Global X Msci China Consumer Staples Etf (CHIS.US)$ $Global X FinTech Thematic ETF (FINX.US)$ $Global X MSCI China Industrials ETF (CHII.US)$ $Global X MSCI China Energy ETF (CHIE.US)$
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SpyderCall OP : @102640653
I'm still bearish at the moment. I need to see more upside. But if there was a solid technical level to buy in, then the fib levels are great for that. I still need to see more upside
SpyderCall OP SpyderCall OP : I'm checking out tencent and baba. give me a few minutes for those
102640653 : Agreed I’m also waiting for the first zone to be broken 18550-18620. I am also looking at sse index as hangseng just closely follow its movement. It’s just like sse is leading its way n the rest of the index mainly china a50, hangseng follows together . Thanks .
102640653 : Just look at sse movement . Good movement with China a50 but hongkong slow to follow in afternoon .
102640653 : Usually in afternoon trade hangseng would be consolidating n after 3 will make some moves but today is exceptional. Something more is there . All the heavyweight r picking up again after lunch . Just keep. An eye open.
SpyderCall OP 102640653 : China is looking very strong for sure
Day Trader 881 : There is a common saying in China and HK stocks .
金九银十。then 十一黄金周。some catalyst major one might come …
102640653 : The weekly candle close for China a50 n sse is positive .looks good
SpyderCall OP 102640653 : Alibaba killed it last night. WOW!
102640653 SpyderCall OP : Look like a new trend may be forming for Alibaba .
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