HSI now parked in ‘killer setup’ at former 52-week low

A very common phenomenon: move to park at support or resistance just prior to high impact news. This forces traders to play breakout or to fade a movement.

In this case, Hang Seng Index is now parked just above 20k which is both a psychological round number, and 20053-52-week-low set in 2015. Just in time for a potential rate hike from the FOMC tonight - this is the kind of ‘killer setup’ that some traders always get caught in because volatility could trip both bull and bear stops alike.

  1. Be overly bearish, jump breakdown in anticipation and end up with the worst entry should prices rebound.
  2. Be overly bullish with tight SL, in a real breakdown situation, stop-loss orders to trigger, wide slippage at the same time should there be a gap depending on impact of news.
  3. Or simply for trades on both sides of the line to be killed equally as price spikes one way and then the other.
HSI index parked at 52-week low forces traders to play breakout, or fade a move

HSI index parked at 52-week low forces traders to play breakout, or fade a move

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Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005.   Soh's Twitter account @sohtionghum was ranked #23 out of The Top 70 Twitter Accounts To Follow In 2015 by MahiFX.   Disclaimer notice: "I do not have a financial advisor's license. I am not qualified by any regulator to give financial advice. I do not know you the reader. Your investment means and motive may be different from me. My posts here are based on observations and meant for education. I am not responsible for for any consequence from your actions."
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