Don't Ignore This Chart!

Hang Seng Reverses after a Normal Correction


The Hang Seng Composite ($HSI) is having a good year with a 6% gain year-to-date. The weekly chart also looks bullish because the big trend is up and a correction just ended. First, the index broke resistance with a sharp advance from late June to early September. Second, the index hit a 52-week high in early September. Third, the 10-week EMA moved above the 40-week EMA in early August. 

After hitting a 52-week high in early September, the index decline with a retracement and pattern that are typical for corrections. First, the falling wedge back to the 21500 area retraced half (50%) of the prior advance. This means the index moved two steps forward and one step backward. Second, the index formed a falling wedge, which is typical for a pullback within a bigger uptrend. The subsequent wedge breakout signals an end to this correction and a resumption of the bigger uptrend.  

Thanks for tuning in and have a great day!
--Arthur Hill CMT

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Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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