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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