Hang Seng China Enterprises Index: High Continuation & Reversal, Low Breakout Continuation Setup

The very weak Close on the HSCEI, yesterday was it for the bearish move. There was no additional downside movement, as the Index opened above the daily pivot @ 11,567 and rallied the balance of the trading day into the close. The Low Continuation Sell Signal was not elected. Instead prices moved marginally higher towards the 1.618 Fib price extension of 12,007, the next Fib target after closing above 11,616.

Daily Trading Signals

The following signals were generated for 24 Jul:.

High Continuation & Reversal Signals are fired when the preceding trading day exhibits a strong compressed bullish trend move throughout the entire day and closes fairly strong near the top of the day’s trading range. The signal implies that the strong bullish move has moved too far, too fast and that a reversal is likely sometime during the trading day.

The Low Breakout Continuation Setup requires that the preceding trading day’s low needs to be exceeded to confirm a change in trend direction. The signal seeks to take advantage of a pullback in the immediate daily trend.

Additionally the 2 Day ROC Buy fired. The 2 period ROC Bullish Indicator should be used more as a guideline, as it is a signal prone to whipsaws. The ROC Bullish indicator works best in choppy markets or after a compressed trend move has occurred. The method is based on George Taylor’s trading technique. Taylor observed there was a natural rhythm to the markets and that every 2 or 3 days (or more accurately every 2 or 3 periods) would cycle between buy and sell days.

Based on the price action over the past three days, this signal quantifies that a buy signal triggered on the close of the previous day. The bullish indication is best used in conjunction with reversal signals triggered for the current day’s trading.

Today’s daily pivot is 11,749, and the weekly pivot is 10,856. Price action above the daily pivot is bullish.

The HSCEI normal trading range is projected to be between 11,702 - 11,946.

The HSCEI extended trading range is projected to be 11,609 - 12,039.

Specific price levels and projections are discussed on the charts below.

Short term 60 Min

60 min chart is very extended and has reached the 11,800 2.618 Fib price extension from the major hourly swing lower from mid July. An hourly close < 11,518 and the market should test 11,333

Daily

A daily close > 11,616 and prices are likely to test 12,007. Symmetry support moves up to 11,703-11,807.

Weekly

The weekly oscillator crossed bullish on Friday 17 Jul.

Long Term support 8,774, a weekly close below this level argues for much lower prices.

Updated Hourly, Daily, Weekly charts with additional Fib support and projection levels are posted below.

Support & Resistance Levels and Daily Signals are posted in each section.

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