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Hang Seng Index flashes reversal patterns at multi-year support zone

Hang Seng Index resisted; may retrace further

The HSI is printing a potential double top bearish reversal based on its 2013 high. At the moment it is supported by a major multi-year support resistance zone that goes back to 2009. Losing this support could send the index down to the next support zone between 21800 and 21300 (blue zone) in a mix of selling, profit taking.

Hang Seng Index Futures

Hang Seng Index Futures weekly chart

 

Head and shoulders pattern on daily chart

The double top pattern is reinforced by another bearish chart pattern, a head and shoulders on the daily chart. The neckline level that has to break to confirm this observation coincides with the multi-year support painted in green. Price falling below decisively may be considered a signal, one that has many significance and confluence.

Head and shoulders

Clear technical levels evident in this chart

 

Fibonacci ratios rule the Hang Seng Index

So far Fibonacci ratios have dictated Hang Seng Index’s movement since we looked at it in June last year. These ratios are a recurring theme and have proven to make very reliable predictions for the index. If the ratios remain true, the next major 50.0% fib retracement agrees with 21300 for the cash index.

Hang Seng Index

50.0% Fibonacci retracement ratio at 21,317

 

How to trade the Hang Seng Index Futures

Find Hang Seng Index Futures (HSI) on MT4. To pull out the chart, do the following:

  1. On the overhead toolbar, click ‘Market Watch’ to show panel on left.
  2. Anywhere in market watch panel, right click to show pop-up menu.
  3. Click ‘Show all’.
  4. Look for HSI.
Hang Seng Index Futures in MT4

How to show HSI Futures in Axitrader MT4

Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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2 thoughts on “Hang Seng Index flashes reversal patterns at multi-year support zone”

  1. Felix Thang says:

    Hello Mr. Soh Tiong Hum,
    Thanks for your analysis. I agree where is holding the area. Do you see the downtrend ongoing?
    Best regards,
    Felix Thang

  2. Soh Tiong Hum says:

    Hi Mr Thang,
     
    Please see this


     
    Hang Seng Index finding support at the blue zone i.e. previous support resistance will qualify for points 1 and 2. If price can also hold above the blue trend line, all criteria for the technical picture of an uptrend are intact. If price goes down further, the picture is no longer relevant.

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