Technical Update - Hang Seng forming potential reversal pattern
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
Hang Seng rejected a longer term falling trend line. The Index is trading in what looks like a rising wedge formation. Wedges are usually reversal patterns and if Hang Seng breaks bearish out the Index is likely to drop to around 20K with support at 20,697.
Look out for a potential break of the rising trend line on RSI, it can give a strong indication of the direction. RSI can break below the trend line before we see the Index break out of the Wedge.
However, if Hang Seng closes above the long term falling trend line AND upper rising trend (of the Wedge) the Wedge pattern is demolished and Hang Seng is likely to test the 200 SMA currently around 23K.
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