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Wednesday, 17 February 2016

Hang Seng Multi Year Time Frame Analysis









General overview for 17/02/2017:

Multi-Year view according to Elliott wave principle:
From 1968 the Hang Seng Index is in bullish cycle, where the wave III of the cycle had been done. Since 2008 the index is in corrective structure that can develops into two possible formations:
- ABC red  - three wave simple corrective structure (ie. irregular flat or any other kind of simple correction)
- ABCDE red - triangle shaped pattern that is typical for wave four



Weekly time frame view:
Two of the corrective waves are completed: wave A red and wave B red. Currently the market develops wave C red to the downside, which might be the last wave in the cycle and then the correction will be completed.




Daily time frame view:
The inside of the wave progression reveals at least two possible counts: main and alternative:
- main count - WXY complex corrective pattern - this cycle might have bottomed at the 61%Fibo extension of wave W at the level of 18211. This might be the bottom for the wave A of a higher degree. If it is so, then the market should rebound in corrective  fashion to the upside ( choppiness, overlaps, false breakouts) to complete the wave B black. On the other hand, the corrective wave A might evolve into WXYXXZ pattern that targets the level of 15055 as a bottom for wave A black. In that case, the wave XX should not trade above the level of 23413.



- alternative count - 1-2, (1)-(2), (i)-(ii) impulsive pattern - this cycle shows a possible five wave downside progression in wave C red as a last wave in the overall ABC correction in wave IV. Any break out above the level of 21012 will invalidate this count.




Support/Resistance:
15055 - Projected Target for Wave A
18211 - 61%Fibo extension|Local Low|
20206 - Technical Resistance
21012 - Blue Impulsive Count Invalidation Level
23413 - Brown Impulsive Count invalidation Level

Trading recommendations:
Bearish biased swingtraders should keep the sell orders opened as long as the level of 20206 provides the resistance and the level of 21012 is the line in the sand for them. Nevertheless, the outlook for the medium term traders is still bearish as the corrective cycle in the wave IV hasn't been completed yet.

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