Hong Kong Index Forming Right Shoulder

Published On: 29 March 2023, 9.15AM | Jeraldine Tan, Senior Dealer

Trade Setup
  • Weekly chart showing rebound from third leg down into channel low
  • It is now forming a right shoulder of an inverse heads and shoulders pattern
  • On backdrop of high interest rates leading to banks failing, there is still downside risk on the economy especially as Central Banks continue to increase rates
  • This may, however, pose an entry point for Bulls who believe in the recovery story
  • It appears like a complete Inverse Head and Shoulders pattern could be formed, with price possibly trading back up to the neck line

Trade Execution
  • Zooming into Daily timeframe, Hong Kong Index looks to continue in a downtrend channel
  • Bulls may patiently await a higher low to be formed (significant support) to signal a change in market structure
  • Trade entry may possibly be on the break above the most recent high with stoploss below the most recent low (the higher low)
  • Take profit will be at the neck line of Head and Shoulders pattern

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