Hang Seng Index Market Outlook 03-04-2010

The HSI had continued to do well last week, reaching a even higher high level of 21500 for the last month. There is something I want to emphasis about this point, whenever a stock price or a index is reaching a higher high compare to the previous high level. We say the price is advancing well. Another well to put it is saying the bull is getting stronger because it was able to push the price up to a higher level. As I said before, an uptrend is characterized by higher peaks and higher troughs.

3 Months Daily Chart
It seems that the HSI is going to break above 21500 level and advance further to 22000. The HSI finished on Friday with a Bullish Bar. My definition of a Bullish bar is on that period the HSI open on the low end of the bar and close on the high end with price range having a higher high and higher low compare to the previous bar. I reckon this is quite a bullish signal on a daily chart. Some trader might see this signal as a trigger of entry for long position when this signal is associate with a short term uptrend (which it was in this case.) And also Bollinger Band had been narrow, so the premium for Call Option will be relatively cheap. On an option trader perspective, it can be a good opportunity to open a long Call on HSI last Friday. P.S. HSI had continue to stay above both 7 and 30 day EMA.

1 Year Weekly Chart
On the weekly chart, it shown a similar bullish bar last week. The distance between the 13 and 30 Week EMA had become more further apart. And both EMA are starting to turn up with HSI staying above both EMA. All these are bullish signs. In fact you can see the HSI has actually formed a trading range between the level 22000 and 20000 over the past 7 months. In my opinion, the Market was resting on this trading rest before it is going to form another big bullish move. Prior to this trading range, HSI had advanced from 12000 to 20000 which was a big move indeed. The market need some time to rest before it can advance further.


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