The index has rebounded from the long-term bullish trendline (formed since 2008) and is trading within a bullish channel (dark blue lines). In addition, the index has broken above the lower boundary of a triangle pattern (light blue line), the 50-week (blue line) and the 250-week (purple line) moving averages. Weekly indicators are also positive. The weekly RSI has crossed above its neutral level at 50% and is heading upwards. The MACD is above its signal line and is heading upwards, while the MACD histogram is broadening up. However, the index is just below the upper boundary of a bullish channel and the neckline (pink line) of a previous head-andshoulder pattern. Therefore, a short-term consolidation cannot be ruled out but it does not change our medium-term positive view. Overall, as long as the bullish channel (dark blue line) remains
intact, we keep our positive view unchanged and expect the index to challenge the horizontal resistance at around 27,900 (around the left and right shoulders of the previous head-andshoulder pattern).

Investors are recommended to accumulate stocks during any consolidation and can use the lower boundary of the bullish channel (around 24,100) to control risk. Support: 24,855 (May 20 top), lower boundary of bullish channel (around 24,100) and 23,484 (overlapped horizontal level since
Mar 20).
Resistance: 27,900 (around the left and right shoulders of the previous head-and-shoulder pattern), 29,174 (Jan 20 top).

Joyce Chan, CMT

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