Sense & Guts - Technical Analysis: Hang Seng Index Showing Sign of Reversal?

What is Technical Analysis?

Technical Analysis is the forecasting of possible future price movements based on the past or historical records. Like other forecasting methods, it is using the past to determine the possible future, although the result may not be 100% accurate but it helps investors to anticipate what is the possible price movements ahead.

Technical Analysis is used by many investors and fund managers. It helps them to determine the trend of the market and individual stock, as well as the timing for entry and exit in their investment.

Wednesday, August 27, 2008

Hang Seng Index Showing Sign of Reversal?

After falling below the support at bottom trend line on 15 Aug 08, HSI has made a small rebounce and closed at 21,056 on yesterday.

Currently there is a strong resistance at 21,337 (20d EMA) and 21,460 (the previous bottom trend line). Although MACD is showing potential positive divergence but we need to know not all divergence will succeed. In order for the divergence to be a positive one, it need to clear the resistance at 20d EMA and 50d EMA (which coincide with the top trend line) as well.

If the resistance at 21,460 cannot be cleared, next support will be at 20,000.

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