61.8% Fib-Retracement Ratio is a multi-year resistance as well
For Hang Seng Index bulls, third time is not a charm as the index fails to breach this confluence of fibonacci ratio and multi-year resistance. In fact price action as seen from the candlestick pattern is now quite bearish. Of course now we are on the monthly chart in this illustration so the evening star can only be confirmed at the end of this month but traders should get the idea.
Important points to note about resistance level
- The 61.8% fib ratio acted as resistance since late 2010.
- I wrote about it here and here last year when price got resisted again.
- A 52-week high which is a psychological level is in the vicinity which I wrote here.
- Since it is a very long term trend line, it has very important significance which I discussed here in “Significant support resistance levels are stronger: USDJPY case study“.
Key takeaway for Hang Seng Index
Until this major 61.8% fibonacci ratio is overcome, the index should correct further since it is unable to rally. In addition, the effectiveness of the 61.8 fib level also means that traders can observe price action around other levels that is the 76.4% on top (as future resistance), and the 50.0%, 38.2% and 23.6% below (as potential support). Hang Seng Index Futures HSI is now tradable on MT4.
Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.
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