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.