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Sunday, June 28, 2009

Hang Seng Index Chart Pattern - Jun 26, '09

In last Sunday's discussion of the Hang Seng index chart pattern, I had commented about the similarity between the Hang Seng chart and the BSE Sensex index chart. The similarity of the chart patterns continued last week with both indices closing above their flattened 20 day EMAs.

The 6 months closing chart pattern of the Hang Seng index has some percentage numbers instead of absolute values, because the Hang Seng index (in blue) has been compared with the Shanghai Composite index closing chart (in red):-

Hang Seng_Jun2609

Till Mar '09 the Shanghai Composite and the Hang Seng indices went in two different directions. From Mar '09 onwards, the Hang Seng has tracked the Shanghai composite. The notable differences are:

1. fewer and smaller corrections in the Shanghai composite, which is still moving within an upward sloping channel, and looking stronger;

2. sharper rise in the Hang Seng from its Mar '09 low followed by a downward breakout from its upward channel, now trying to play catch-up.

The slow stochastic bounced up from just above the oversold zone. The %K line has a bullish crossover over the %D line. The MACD is positive but still below its signal line. The ROC is just below the '0' line. The RSI went below the 50% level and is moving sideways.

The first two indicators are mildly bullish. One is neutral and the last is mildly bearish. Volumes have been average. The tussle between the bulls and bears seems to be going slightly in the bulls favour.

Bottomline? The Hang Seng index chart pattern is trying to regain its bullish fervour. Keep taking profits and wait for a deeper correction to re-enter.

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