An up-date on Hang Seng, post Christmas

In my last post on China, I used Hang Seng as a reference of its health. I estimated that Hang Seng should be on its way down. 

Fig 1. Hang Seng weekly chart

Hang Seng has just broken previous low and established a lower one, it fell into the range that the first level support is located. 

On the week of Christmas, it was stopped by the short term 61.8% projection support. However, there is not yet indication of reversal, firstly the bar is too small, there are also insufficient bars to show a clearer picture. It will probably take the coming week to have a clearer prediction.

An up-date on Dow Jones - Post Christmas

 My last read on Dow Jones was bearish since it potentially did a non-failure swing and crossed 21-week moving average. Dow was apparently not ready to do so. The week after my prediction, it reversed up. 

Before I move on, if you are looking at the chart on my blog, you will notice slight difference when compares to the real time Dow Jones. I am utilizing the charts on my trading platform and the numbers varies a little. Nevertheless, the shape and structure of the counters still applicable.

Fig 1. Dow Jones Weekly Chart

For the time being, it has not reached its previous high, there are some uncertainties in Dow. for the next 2 weeks, it retested the 21-week moving average support. During the week of Christmas, it closed with a green bar. with a relatively long tail (or wick in candle stick).

This is significant to me as I deem it to attempt to climb higher. What are the possibilities now? 

I was looking at the MACD, while Dow climbs to a higher high each time, its new heights are lowered. This is an indication of divergence. The tendency of reversal is high, I just do not know where.

Next, we ARE crossing Christmas, and my teacher ever told me that the feeling of festivity elevates positive emotion and period right after the Christmas has a higher chance of going up. I will then expect a bull for the coming week at least. 

So far, the trend of 21 and 55-week moving averages still support this direction.

Having said so, we should see some resistance at 36,564 since it is the previous high. setting up the projection measurement, we should see further resistance between 37,001 to 37,808.

If Dow decides to reversal downward in the coming week, then the previous estimation still valid.

Nikkei reversing or correcting?

 I am easily influenced by others, especially when the person is of authority level. 

I have for a while managed a regular gain in my trading through stringent control on my trading strategy, especially setting fixed gain utilizing Fibonacci ratio. I attended a session featuring one of my teachers in trading. By the end of the session, I have decided to be bolder and removed trade target.

The result was a disaster! Within a day, I ended with 3 consecutive losses, triggering the need to stop trading. I could not accept that it was a problem in my trading and must be market abnormality. Of course, something seems unfamiliar with the market, the spread of the bars has increased and so did my risk level, my value per bar is much smaller and I need larger move for similar gain.

I have also added Average True Rage(ATR) to my charts, however, it took some time to really understand the impact of this indicator on my chart read. It actually made me think that I should be earning more than I should and led me to sit in the trade much longer. 

It was a good thing that once I faced issue with my trade, I moved into demo trading, which allow me to check what went wrong.

As for today, let's look at Nikkei.

Fig 1 Nikkei 225 weekly chart

It is interesting to note that Nikkei started to rise by March 2020, the start of the pandemic, it seems like the Chinese meaning for 危机 is true, when there is danger, there is opportunity. 

The climb in Nikkei reached a peak by February of 2021, it then went through a long correction phase until August when the weekly chart was supported by its 55-week moving average. While gaining a mildly new height, it quickly retreated, it tested the previous low, which again stopped by 55-week moving average. and until last week, the third time, may be third time's a charm?

My question is: how do I determine its trend? Is it going to be up or down? I am not 100% sure, 

If I am to decide, I would be the gradient of the down trend pointed by the red arrow. The descent is very steep, indicating a lot of momentum in the down trend. The correction thereafter with a more gradual gradient and did not manage to reach its previous peak. 

Additional observation would be divergence in the 8-week moving average, its second peak is lower than the first. 

There is however no divergence in the 21-week moving average, probably indicating a  short term correction.

While the move this week is positive (green bar), my feel is that it is pull back before it pounces through the 55-week moving average this time round,  

 Using Fibonacci projection, the next support level should be between 25,097 and 26,176. I might find the 25,097 level to be more prudent since it also coincides with the 38.2% Fibonacci retracement line.

I am using 8-week average for ATR, the fluctuation is about 1,000 points.

Is Dow Jones reversing again?

I remember the last time I witnessed Dow reversal was sometime during 2017 or 2018. I have just attended a class on trading by Sandy Jadeja. Dow just flipped and started its down trend. It followed by a plunge that lasted for a f week, then a side trend of close to half a year before it crept up slowly to its previous high....which then plunged one more round.

Fig 1. Dow Jones weeklychart

Dow has been climbing up lately since January this year. It shot up to a new highat the end of last month (October 2021) and began to retreat for 4 weeks now. Lately it has just crossed 21-week moving average with resistance moving back up. 

If basing on the classic technical analysis, we can consider Dow to be doing a non-failure swing, it went to a newer high,  followed by breaking of the previous higher. It does have to cross the previous low for the trend reversal for more confirmation.

Using Fibonacci projection and extension measurement, Dow has just retreated from the 127% projection and the 161.8% extension resistance level, there is also a Bollinger envelop in it's way.

Indicator wise, divergence is seen on MAC where every higher high in Dow is countered with a lower high on MACD. Most likely  Dow is preparing for its own descent.

as for thebar this week, while there is a long tail at the lower body of the bar, it nevertheless did not manage to turn green at the end of the week. The last time I trusted this a reversal bar, I got burnt. So based on my system, I will not go long on this.

My feel is that it will continue to go downward in the coming week, at least until it reaches  the 55-week moving average when another serious decision has to be made by the Dow.

The level to watch is 33,330 where the 55-week moving average lies. If this support level is broken, the next level is 32,543, where the 100% projection line is located. As far as I am concern, Fibonacci line seems to act like normal resistance, which can turn from resistance to support. Coincidentally, the projection line also located very close to the 127% extension line.