Hang Seng Index spectacular rise is still going strong after prices broke the psychological resistance at 25,000 last Thursday. However, based on the technicals, we will be looking for a downside correction to retest the support level:

1. The formation of a potential 5-wave broadening wedge signifies that the (C) wave has topped out after prices were strongly rejected at 26,500 resistance level on the 7^th of July 2020.
2. The formation of the dark cloud cover candlestick reveals strong reversal ahead. To add on, the dark cloud cover rejects the 78.6% Fibonacci retracement level of the immediate swing high-low of 21,139.26-28,000.02.
3. For the (D) wave to be complete, the sell down must occur to coincide with the wave structure.

*The technical call is valid only for 3 weeks.

* The broadening wedge formation consist of 5 waves labelled ABCDE. Each wave consist of 3 sub-waves and E wave normally indicate the last leg of the directional move. Hence, the upside of the Hang Seng Index is more of a corrective move rather than a bullish impulse.

CHART LEGENDS 

Moving Average

Red dotted line = 200-day moving average

Blue dotted line = 50-day moving average