Hexun Investment Advisor Feng Lushun: On April 2nd, what’s next for Hang Seng Tech?

Interpretation of Hang Seng Tech Index No. 2. Today, the Hang Seng Tech Index has once again adjusted with shrinking volume. Is this adjustment in place? Let’s analyze it using the relationship between volume and price.

From the time perspective, the Hang Seng Tech Index has been adjusted for more than half a year. In terms of space, the decline has exceeded 30%. Both time and price movement have already approached sufficient levels. So can there be a stop-the-fall and rebound now? First, let’s judge it using the Gann theory. Gann predicts only once per month. Last month, after it broke below the Gann lower bound, it rebounded. It touched the upper line and then fell back. A break below leads to a rebound; after the rebound, indicators must improve. Gann only predicts price points: it will rebound when it reaches that position, and if it rises above that position, it will fall. But for the subsequent move to be upward, the indicators must also perform well. The larger cycle has already declined by about enough, and in the smaller cycle the 5-day moving average must form a golden cross with the 10-day moving average, and the MACD needs to turn red.

At the same time, the Hang Seng Tech Index has formed a bullish divergence at the bottom—price has made a new low, but the MACD indicator has not made a new low. This kind of bullish divergence needs confirmation, meaning it requires a bullish candle with stronger momentum that penetrates the 5-day and 10-day moving averages, ultimately achieving a golden cross of the 5-day moving average over the 10-day moving average and forming an uptrend. If here there isn’t a big bullish candle, the moving averages will not form a golden cross, and the position will remain unstable. Next, the key is to wait until the moving averages show a golden cross before taking action.

According to the Elliott Wave Theory, wave one is an advance, wave two is a correction, and wave three is the main uptrend. The core of wave three is to break above the high of wave one. Therefore, either wait for the moving averages to form a golden cross before getting in, or wait for a breakout above the high of wave one before getting in. Never blindly bottom-fish.

(Editor: Zhang Yan ）

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