Bearish trend was not unexpected. The Hang Seng Index (HSI Index) experienced a decrease of 2.7% for the previous week as it continued to ride on its Wave C, rather inline with our call for a bearish trend. With the bollinger bands moving downwards and with the 14-day RSI not in oversold territory, we believe that the direction of the HSI is still negative and there remains further room for correction.
Our target of 17,097 for the HSI is still intact, as this is where the 100% fibonacci extension of Wave A is located. While resistance levels are seen at the 18,234 – 18,258 and 18,777 – 18,780 regions respectively, we recommend that short-term investors adopt a sell-on-rally strategy as the current Wave C is expected to continue to drag the HSI down.
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