Tuesday, April 20, 2010

Quiz on Technicals

Dovetailing with Monday's Shanghai chart in the newsletter, check out the Hong Kong ETF. Are you a buyer or seller and why?

I cannot dispense actual trading advice right here but let's list the evidence:
  1. Resistance breakout failure
  2. Divergence in On-balance volume
  3. Broken trend line
  4. Downside breakaway gap
Look at RSI (divergence), relative performance (lagging) and MACD (crossover), too.


forex-cat said...

Your blog is very interesting.
Thank you.

...my blog:
forex chart analysis and a cat

patrick neid said...

A seller--even though I think the markets world wide still want to go higher!?

I like the trade for all the reasons you state in addition it comes with a clearly defined risk, a stop over the old highs. Just as importantly the US markets are very close to printing .618 retracements across the board. Generally speaking a consolidation should take place around this level further allowing Hong Kong to work to the downside.

This is also taking place within the confines of a possible massive top forming since last July. However massive tops that fail are simply consolidations for major moves to the upside. Either way I think the risk reward is certainly worth the trade.