HSI pattern break down? Not just yet.....

For a moment last week when I saw HSI re-trace from the crash and entered the wedge zone, I thought to myself, "Not again, another case of pattern break down!" Under normal circumstances, once a chart broke out of a pattern the most it will do is retouches the envelop before moving on. Seems like HSI was not ready to move down yet.

...and the there was data black out, my service provider failed to update their data base throughout the weekend..... I only managed to get a full update just now.


Fig 1 HSI Daily Chart

I am using the HSI daily chart rather than weekly because the wedge looks better. The wedge is pretty straight forward. HSI has since retraced from its retracement. It is now again at its envelop. However, it is resisted by its 21 days moving average 22,171.

Weakness is also shown on RSI of the chart which is reversing at a lower amplitude. Let's just say it is doing a counterwave now, I assume it completed A and now doing the B wave, which should looks more like a abc pattern. The "B" now should be partial (I think) because it is a stright forward upthrust. I expect downward slide before moving back up one more time before it starts its wave C.

Now how am I to be sure that this is a reversal with ABC wave? Ian Copsey revealed in his book Integrated Technical Analysis mentioned that other than appearing on counter waves, wedge can also form on 5th wave. Base on the wave count this seems likely to be a wedge on 5th.