Daily Hang Seng – Jan 28
Click the charts to enlarge
Chart 1 – The Hong Kong market is getting very stretched to the upside with the Slow Stochastic giving bad signals as you can see.
The RSI is very stretched to the upside now although the move is in line with the MACD upside signals.
So this latest rally was not signaled by the technicals we have been looking at.
All that said, you can see we are now hard up against the 200-day Moving Average and that is going to lend some overhead resistance. In conjunction with the very overbought RSI it is really not unreasonable to expect a correction from here.
Chart 2 – I’ve refreshed the Fibonacci Projection on this chart after the failed triangle breakout we had last week.
The technicals did not signal this latest little upturn but don’t get too excited because the overall and broad decline in place since Q2 2011 is still in place.
The correlation with Wall Street remains high.
