Hang Seng Up-date

 A few weeks ago, I did a post-Christmas up-date on Hang Seng. A small reversal bar just formed at 61.8% Projection Support level. 

In general, I would consider if reversal at this Fibonacci point, it is likely to be on a correction. Further more, I was uncertain at the time since it was a single reversal bar, I have decided to let it develop further for a few weeks before looking at it again.

Fig 1. Hang Seng weekly Chart

So few weeks have past and there were 2 more bars of uncertainty, but the one dated 2nd Jan 2022 has a significantly longer tail pointing downward, and a nice long bar just formed on week of 9th Jan 2022, It is quite firm that Hang Seng is reversing up. The question to me is whether this is more short or long term?

The lines I drew on the chart are not trend lines, they are merely an indication of the trend gradient. One of my ways to tell if it is of main or counter trend is by looking at the gradient, a gentle gradient most likely mean counter trend while steep gradient main trend. The issue here however is that both gradients are the same. I can't use that for estimation.

Looking at MACD, it is clear that there is a divergence against the chart, so We are seeing potential reversal, but with such divergence, there tend to have 1 more dip before moving up. So I will assume a likely short term reversal. How far do I think it will go then?

Well, it did cross the 8-week moving average. It is likely to be temporarily stopped by 21-week moving average, forming a flag or pennant while supported by 8-week moving average. It should push towards 55-week moving average before reversing downward.

Now this is just a prediction and market does change its mind all the time. So be vigilance in monitoring its development.