Technical Update - ASX 200, Hang Seng and China A50 Technical Update - ASX 200, Hang Seng and China A50 Technical Update - ASX 200, Hang Seng and China A50

Technical Update - ASX 200, Hang Seng and China A50

Equities 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank Group

Summary:  ASX 200 uptrend is weakening and could perform a correction before it reaches resistance area
Hang Seng And China A50 have both formed top and reversal patterns strongly indicating a correction to unfold


Today's Saxo Market Call podcast.
Today's Market Quick Take from the Saxo Strategy Team

ASX 200 uptrend is slowing as the Index is nearing strong resistance area around 7,592-7,625. There is minor divergence on RSI indicating a weakening of the uptrend. A correction could be seen before ASX 200 reaches the resistance area. A correction that could take ASX 200 down to around 7,300-7,250. 21 and 55 SMA’s will provide some support limiting the correction but a dip down to support at 7,167 should not be ruled out.
However, the uptrend is still intact and ASX could move higher before a correction. Divergence on RSI is just a warning of a looming trend exhaustion and reversal behaviour.

 

Source all charts and data: Saxo Group

Hang Seng Index has formed an Evening Star like pattern over the past three days. A correction is likely. A test of the lower rising trendline and the support at around 21,388 should be expected. If Hang Closes below the trend line and below 21,388 a sell-off down to around 20K could be seen possibly dipping down to the 0.382 retracement at 19,605 and to the 200 daily SMA.
To cancel and reverse the reversal pattern a close above 22,700 is needed.
There is no divergence on RSI indicating Hang Sang could move higher above 22,700 after a correction. No strong resistance until around 25K

FTSE China A50 has formed an Evening Doji Star like pattern which is an indication of top and reversal. A correction is in the cards and support 13,500 could be tested. However, a dip down to the 200 daily SMA and 0.382 retracement at 13,191 should not come as a surprise.
If A50 moves higher, which RSI indicates it could, a close above 14,445 will demolish and reverse the top and reversal and correction scenario, and A50 would be set for a move to resistance at around 15K.

 

 

RSI divergence explained: When instrument price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992