Technical Analysis: Hong Kong Index at a significant support level, optimistic in the short term
Lester Chua, Dealer
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Taking a look at the Hong Kong Index, we can see that price closed the week at a low, forming a dragonfly doji candlestick which could signify a potential reversal.
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Price broke through the 61.8% Fibonacci retracement level (green arrow) but did not manage to close below it, which shows further signs of a strong support level. Price will be expected to respect this support level, and we will be looking at the 78.6% Fibonacci level as the next target price (red arrow) before further consolidation ahead.
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Drawing 2 trendlines, we could also be looking at a potential breakout of the triangle formation in the weeks to come, likely on the back of strong fundamental news. If price were to close below the 61.8% Fib level as well as the bottom trendline, we can expect a strong downwards swing all the way to the 23.6% Fib level.
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