Hang Seng Warning Signs

Hang Seng Index broke its 50 day moving average support line this week, moving the index into “Warning” phase.

The index appears to be forming a top that looks like a head and shoulders pattern top. The neckline for this pattern is at 23,000 which serve as support level. In the event that this support cannot hold the selling pressure, we are looking at a minimum downside target of 21,000.

More than US$3 billion worth of proposed IPOs in Hong Kong were deferred. This signals that the equity market may have peaked for the year.

The warning sign for further weakness has appeared and traders need to listen to the market in order to avoid being burnt by the down swing.

GBPUSD Continues Bullish Trend

The FED has announced that It intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011. With the news out of the way, what is next for the US dollars?

The GBP recovered from a test of its 50 day moving average and it is now testing the 1.61 level. The phase chart for GBPUSD is clearly in “Bullish” mode and the momentum may help to push GBP higher against the USD.

The next resistance for the currency pair is at 1.64 and looking at the technical charts, we may soon get there.