Weak Hong Kong data bearish for HK50
Activities in Hong Kong’s private sector continued to slow in September. Will the HK50 continue declining?
Recent Hong Kong economic data were negative on balance: the inflation slowed while retail sales growth accelerated in August. At the same time the balance of trade deficit widened in August on bigger rise in imports than exports, and business activity in private sector contracted sixth consecutive month in September. Weaker economic data are bearish for HK50.
On the daily timeframe the HK50: D1 is below the 200-day moving average MA(200) which is falling, this is bearish.
- The Parabolic indicator gives a sell signal.
- The Donchian channel indicates downtrend: it is tilted lower.
- The MACD indicator gives a bearish signal: it is below the signal line and the gap is widening.
- The Stochastic oscillator has breached into oversold zone, this is bullish.
We believe the bearish momentum will continue after the price breaches below the lower boundary of Donchian channel at 25114.50. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above the upper Donchian channel at 27940.50. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (27940.50) without reaching the order (25114.50), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.
Technical Analysis Summary
| Position | Sell |
| Sell stop | Below 25114.50 |
| Stop loss | Above 27940.50 |