Daily Hang Seng – Feb 18
Click the charts to enlarge
Chart 1 – The hesitation in the price action signaled by the overbought indicators saw them come back a little but we are again now overbought with this latest little rise.
The good correction I have been expecting has yet materialize.
Yet again the Slow Stochastic and RSI are both still stretched above overbought.
With the flattening out of the price action the MACD lines have closed so watch for a cross to the downside there. You can see we have had a nice two month, intermediate term, upside trend as indicated by the MACD so a good correction to this is in the offing.
As per last week’s comment, I would still watch for a correction.
Chart 2 – The Fibonacci Projection 100 pct level is approaching and should lend good resistance.
You can see this latest move higher is on the back of slightly higher volume although the Alexander Filter is high. See what happened the last time the AF was above the upper line. I’m still favouring a correction to this market on the basis of this chart as well.
Once the MACD crosses on chart 1 I’ll freshen the Fibonacci Projection on this chart.
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.
