The HSI violated the mid-term downtrend line on 17 Sept 2010. On seeing the market continue to maintain its posture at above the bearish trend line for more than a week, we can now safely declare that the previous downtrend market has come to an end. After creating three major lower-lows since January this year, the market finally violated the previous major peak of 21,805.94 on the same day that the downtrend line was violated. The violation of the trend line coupled with the breakout from the recent high reaffirm the decisiveness of the shift in trend.
The uptrend started when sellers failed to push the market below the very critical support at the 19,423 pt-level in May this year. The HSI did dipped below the 19,423 pt-level for a number of trading days, but the violation never proved convincing enough. The index did not fall sharply lower subsequently but only languished slightly below the 19,423 pt-level for a while. The subsequent rebound from there finally brought the index to the current level.
A relevant paragraph from our last update on HSI about a month ago stated that: “it is obvious that the longer-term technical outlook of the HSI will remain bearish as long as it fails to crack above the mid-term downtrend line.” As the downtrend line has been confirmed violated and it seems decisively taken out, we now shift out near-term technical view on HSI from bearish to bullish.
We note that our view has only been changed after the HSI has already risen by close to 3,000 pts from the critical low of the 19,423 pt-level. This is the downside of technical and trend analysis. The turnaround signal can only be detected after the trend has shifted given that the HSI was previously descending within a broad “Descending Triangle”. The two lines that form the “Descending Triangle” were still far apart when the breakout occurred on 17 September 2010.
Going forward, look for all the previous major highs as the upside hurdles. We still view the 22,291 pt-level or the April high as the immediate resistance as the index only managed to eke out this level yesterday. The next resistance is seen at the 22,670 pt-level followed by the 23,099 pt-level. To the downside, look for an immediate support at the 22,000 pt-level followed by the 21,801 pt-level.
The uptrend started when sellers failed to push the market below the very critical support at the 19,423 pt-level in May this year. The HSI did dipped below the 19,423 pt-level for a number of trading days, but the violation never proved convincing enough. The index did not fall sharply lower subsequently but only languished slightly below the 19,423 pt-level for a while. The subsequent rebound from there finally brought the index to the current level.
A relevant paragraph from our last update on HSI about a month ago stated that: “it is obvious that the longer-term technical outlook of the HSI will remain bearish as long as it fails to crack above the mid-term downtrend line.” As the downtrend line has been confirmed violated and it seems decisively taken out, we now shift out near-term technical view on HSI from bearish to bullish.
We note that our view has only been changed after the HSI has already risen by close to 3,000 pts from the critical low of the 19,423 pt-level. This is the downside of technical and trend analysis. The turnaround signal can only be detected after the trend has shifted given that the HSI was previously descending within a broad “Descending Triangle”. The two lines that form the “Descending Triangle” were still far apart when the breakout occurred on 17 September 2010.
Going forward, look for all the previous major highs as the upside hurdles. We still view the 22,291 pt-level or the April high as the immediate resistance as the index only managed to eke out this level yesterday. The next resistance is seen at the 22,670 pt-level followed by the 23,099 pt-level. To the downside, look for an immediate support at the 22,000 pt-level followed by the 21,801 pt-level.
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