Hang Seng Index had a sell-off just as we expected on 8^th July. Based on the recent technicals, the Hang Seng Index will rally to form the last leg of the corrective wave E:

1. The formation of a potential 5-wave broadening wedge still stands as we mention on our report dated 8^th July. The completion of wave (D) just above the support zone indicate the bullish upside will come soon.
2. The formation of the Morning star candle stick above the support zone at 23,764-24,000 is an indication of a bullish reversal.
3. The bullish candle on Tuesday has successfully close above the 50-day moving average. Indicating a strong desire to continue upside.
4. Falling wedge formation within the broadening wedge formation also strengthen the bullish reversal bias.
5. Stochastic Oscillator has indicate an oversold cross over.

*The technical call is valid only for 2 weeks.

* The broadening wedge formation consist of 5 waves labelled ABCDE. Each waves 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