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Hang Seng HS50 Trade Idea

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Hi all,

I would like to share my trade idea on HSI, hope to get advise from all the great people here.

1. HSI remains weak on Daily chart.

2. Multiple week long protests and weak GDP weighs on Hong Kong market in the weeks to come.

3. Although HSI may find some relief from a recently announced economic package and any positive US-China trade talks, negative sentiment remains

 

Trade Idea:

1. Current bull on daily chart is strong, it is likely exceed 20 EMA and extend beyond it.

2. Wait for candle to close below 20 EMA again.

3. Short with TP of 25000 for ~1000 pips. SL at 500 pips for R:R of 1:2

 

image.thumb.png.9fe2a40edfc21c292e6c2db5a3bf6053.png

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Guest Jonah
1 hour ago, tehka said:

Hi all,

I would like to share my trade idea on HSI, hope to get advise from all the great people here.

1. HSI remains weak on Daily chart.

2. Multiple week long protests and weak GDP weighs on Hong Kong market in the weeks to come.

3. Although HSI may find some relief from a recently announced economic package and any positive US-China trade talks, negative sentiment remains

 

Trade Idea:

1. Current bull on daily chart is strong, it is likely exceed 20 EMA and extend beyond it.

2. Wait for candle to close below 20 EMA again.

3. Short with TP of 25000 for ~1000 pips. SL at 500 pips for R:R of 1:2

 

image.thumb.png.9fe2a40edfc21c292e6c2db5a3bf6053.png

Like your idea

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@tehka,

First of all, thank you for sharing this trade idea.

Secondly, it is nice that you have explained your trade idea with simplicity as you must appreciate the audience on IG Community. There are only a few 'active' participants on the IG Community who could understand the truly complex trading explanations.

In terms of your trading idea, it may well work, but it seems risky to me. When looking at the daily, the price is below the 20, 50, 100, and 200 DMA's. So it is bearish and ripe for a short trade. I think the 'short' trade could have been initiated earlier when the price went below its 200, 100 and 50 DMA's. There were points to be taken from that point to the price going below its 20 DMA. However, hindsight is a wonderful thing. 

75637296_HongKongHS50_20190819_05_22.png.cb924e287d4a81a11af97fef80ca7d54.png

The problem is that the price may have support around the 24500 level. Also like you said the price could surpass the 20 DMA which would be a sign for the more aggressive traders to go long. The thing for me that is in your favour is the the Moving Averages curves are sloping downwards on the 'daily' which is bearish and may well support your trading idea.

Lets us know how your trade does, good or bad. 

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Thank you all. I might enter the day after tomorrow if I see a confirmation candlestick tomorrow like a bearish engulfing pattern or doji on the daily chart.

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17 minutes ago, tehka said:

Thank you all. I might enter the day after tomorrow if I see a confirmation candlestick tomorrow like a bearish engulfing pattern or doji on the daily chart.

26309 (orange) resistance is key at the moment, if that can hold then the short looks good, below is 24785 (purple) support off the monthly chart.

image.thumb.png.6d9470f14088fa29ef70b4c0de9bbaa8.png

image.thumb.png.a9903e178c506cb61ce9071a95ecb3a3.png

 

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Posted (edited)

Some information for those who have never traded this before and would like to trade this:

1. Morning session - 9:15am-12pm (ig.com's spread is usually around 5 pips)

2. 12pm-1pm - lunch time (spread is 30 pips)

3. Afternoon session - 1pm-430pm (spread is back to 5 pips)

4. 4:30-5:15 (spread is 30 pips)

5. After trading Hours: 5:15pm - 3am (spread is 8 pips)

 

Note the time is Hong Kong time (GMT+8). Also, if you have a long term short position, there is this daily "Adjustment for dividend" that will be deducted every morning, it is like forex swap.

Edited by tehka

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Thanks for sharing tehka - interesting idea. 

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Thanks for sharing your idea @tehka, nice to see some new contributors and new actual trade ideas coming out.  For the record I am long term bearish stocks so this chimes with my bias.  However I am short/medium term bullish. 

I do not think the time is yet ripe for the bearish move.  I am more of a US large cap follower myself but Hang Seng is one of the markets that I think may have already topped out, see my "Stock market turning points - are we there yet?" thread for more on this if you have a mind to.

If I use my analytical method on the Hang Seng I see the following:

  • The index may have topped out in early 2018 OR it may have another leg up in it.  It would not be beyond the realm of possibility for a strong push on US large caps to drive a final bullish move on the Hang Seng.  This would be an end stage exhaustion bull run I am guessing but we will have to wait for further price action to see.
  • The rally since 2009 has been less powerful than elsewhere, particularly the US large caps and has put in 3 distinct bearish phases, including the current move.  If the red labeled EWT is true then we will see another ATH and if my Pennant is valid then that high could be around the 36000 mark (all conjecture at this point).
  • I have a decent pair of up sloping channels, the lower of which provided support of late.  There is also a decent horizontal zone of support at the recent turn up (circa 24000).  Additional I have a resistance trend line (black) with a supporting prior pivot that lends credibility to the ATH 36000 target.
  • Zooming in to get a closer picture on the weekly (2nd chart) the move down to Nov 2018 could be an A-B-C (bullish) or a 1-5 (bearish) so no help there.  The rally was stopped at the Fib 62% (a classic retrace level so maybe an A-B-C then?).  However at this point there are too many scenarios to pick out a clear lead candidate so all I can say is that the April 2019 turn could be a retrace end preparing for a larger drop (the price action since then might support this) or only the first wave of a larger retrace to maybe to the Fib 76/78% or the wave 1 of a final bull run to another ATH.
  • If we look at the daily chart we can see that there was Positive Momentum Divergence (PMD) at the recent turn and again an inconclusive form to the bearish move down.

All in all I would not be keen on a Short at this time and in fact I would want to see a break through the 24000 support level to get Bearish confirmation or price action and other signals at a higher level of a credible bearish turn.  Further price action will add to the picture and hopefully clear up some scenarios (or ideally take them off the table) but with US large caps rallying I would sit back and wait on this one, for now.  If we see other indices turn bearish that may change things but bear in mind that in an ending phase there is typically a lot of whip saw price action as Bulls and Bears slug it out for dominance so watch out for Bear traps.  I firmly believe that all the major indices are connected and the next big shock will be global not local.  In terms of targets, I think that any break of the 24000 level signals a long term Bear market so I would be think much longer term but then I am a long term swing trader so horses for courses on that.

 

HANGSENG-Weekly_190819.thumb.png.8c8fb831edadc9e3b2a178f1a980f4bd.pngHANGSENG-Weekly_190819A.thumb.png.96410c5ee70f1ec3f634dfee7551c109.pngHANGSENG-Daily_190819.thumb.png.cdce4cb26364ec52d159093766b998da.png

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Wonderful analysis Mercury. Are you a professional trader?

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Ah, no @tehka, retail.  Strictly a long term capital appreciation trader rather than income seeking.

 

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@tehka,

First of all, just out of interest did you understand the wonderful analysis you are referring to? If so then how would you use it your advantage in your trading idea to give you even a better chance of success and a greater chance of making more profits? 

Indices tend to move up and down together. There is a correlation and this is pretty clear when you monitor the price action on a daily basis. Even if you look at the charts then you will see a lot of similarities. This means any trading strategy for indices can be applied to several similar trending indices.

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I am not so advanced like Mercury here but I could at least understand half of what he is talking about. Yes it did trigger me to consider the possibility of the bullish trend pushing price to 30000 levels.

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Hi greetings from Singapore & finally someone started a thread on HSI.

 

😗

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two charts , weekly BIG picture and an hourly. Price is now in "NoMans Land" caught between to GAPS , so has pulls on it either way , so not a great place for a trade atm imo

Capture hk w.PNG

Capture hk1.PNG

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Guest trendy tim

With bonds underperforming and analysts keeping a cautious eye on the inversion of the yield curve, the likelihood of a recession is still up for debate as investors seek stability in Treasuries. For me it's a 'naw dawg' on the recession / short. 

Despite continued protests, the Hang Seng is up 2.2%.

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If price ends the day around 26200 followed by a red candle tomorrow below 26000, this is a pattern known as "doji evening star" and is signal the price may reverse down.

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2 minutes ago, tehka said:

If price ends the day around 26200 followed by a red candle tomorrow below 26000, this is a pattern known as "doji evening star" and is signal the price may reverse down.

True the London session has been weak and so far resulting in a pause bar on all the indices but may see some action come the US session. Ftse is the exception which is trying to play catch up.

image.thumb.png.c6aef0ee14ee41a4dfd45701dc65a747.png

 

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From fxstreet. Quote

"Hong Kong's Hang Seng index is currently down 0.80%. Notably, its 50-day moving average (MA) has crossed below the 200-day MA. That is the first death cross (bearish crossover) since July 2018."

Hang Seng has fallen heavily this morning despite a stong wall stree last night. It has crossed back down from 20 EMA up to 20 EMA down. If price ends below 26000 on daily chart tonight would be a good short entry

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18 minutes ago, tehka said:

Hang Seng has fallen heavily this morning despite a stong wall stree last night. It has crossed back down from 20 EMA up to 20 EMA down. If price ends below 26000 on daily chart tonight would be a good short entry

The Asian markets took a strong hit 4 hours ago but can't find any news that caused it, China indices trying to rally but HK struggling.

image.thumb.png.0f7f8b7d80bbc522c444be0782b4558c.png

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On ‎20‎/‎08‎/‎2019 at 07:35, elle said:

oops wrong hourly

Capture hk 1.PNG

still between the "gaps"  taken more stops from above maybe

Capture hk.PNG

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Posted (edited)

Sorry

Edited by dmedin

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10 hours ago, elle said:

still between the "gaps"  taken more stops from above maybe

Capture hk.PNG

 

Capture hk.PNG

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still caught between the gaps - maybe "Jackson Hole" may resolve it ?

Capture hk.PNG

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This market is a tricky one, it has one foot in both the western and Asian camps, clearly it is influenced by the China markets which are suffering due to the trade war, all the econ data out of China is poor and continuing to drift down. The HK market is also clearly influenced by the western indices and is trying to maintain the same shape and structure as them.

The western camp seems dominant at the moment so I would look to them for the lead in the future direction, if Dow can jump the current resistance I would expect the HK to do the same.

Daily chart;

image.thumb.png.19dc6d58b87e2118bd54167c95e15be1.png

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HK market has clearly brushed aside all that is happening within and moving in tandem with the Dow. The bulls have proven to have the upper hand so far

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