HSI closes above its opening price after recovering from early selling pressure
Hong Kong Hang Seng Index (HSI) Technical Analysis Report for Aug 10, 2020 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, HSI finished Monday at 24377.43 losing $154.19 (-0.63%). Today's close at 24377.43 marks the lowest recorded closing price since June 29th. Trading up to $104.15 lower after the open, Hang Seng managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (HSI as at Aug 10, 2020):
Monday's trading range has been $263.34 (1.08%), that's far below the last trading month's daily average range of $447.19. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for HSI.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar. Additionally, four candlestick patterns are matching today's price action, the Bullish Doji Star, the Bullish Harami Cross Pattern and the Southern Doji which are known as bullish patterns and one neutral pattern, the Doji. The last time a Bullish Harami Cross Pattern showed up on June 20, 2014, HSI actually lost -1.68% on the following trading day.
Prices are trading close to the key technical resistance level at 24552.55 (R1).
The stock index shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Selling might accelerate should prices move below the close-by swing low at 24167.79 where further sell stops could get activated. Trading close to June's low at 23539.91 we might see further downside momentum if potential sell stops at the level get triggered.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bullish Harami Cross Pattern" stand out. Though it is usually interpreted as bullish, it has actually shown to be bearish for Hang Seng. Out of 5 times, HSI closed lower 100.00% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after eight trading days, showing a win rate of 60.00% with an average market move of -0.02%.
With four out of the other five Major World Indices closing higher today, the ones that stand out on the positive side are DJIA gaining 1.3% and FTSE closing 0.31% higher. On the flipside the worst performer has been NDX closing -0.49% lower. Read more