A Word on Technical Analysis
I'm glad this happened. This event illustrates nicely the whole essense of technical analysis. At this point, one might say: 'technical analysis failed'. What one fails to realise is that technical analysis is a game of probabilities, and price action is king. There are no certainities, and we have to adjust our trading positions and sizes, as the 'future' unfolds!
A lot of people going around bashing Elliott Wave Theory. The last word says it all - it's a Theory. No one, no theory, and no system can predict the future with 100% certainity. You can have all your wave counts, all your complex indicators, but in the end price action is all that matters. The danger is when we try and get the price action to fit our counts and indicators. Personally, I employ Elliott Wave Theory quite often to generally identify the stage of the market, and high probability setups in conjunction with a few indicators.
My posts on this blog are humble attempts to identify and share with you those setups, mainly to help my own trades.
What's next for the HSI?
Well, first of all the breakout needs to be tested in the next few sessions. Currently in the overbought region and at the upper channel line. We can expect some some consolidation soon. If the trendline holds, there is a high probability that the prices will move higher. Strong resistance areas are 22600, followed by 23000.For now, the short-term trend is UP.
On the other hand, a sustained break back below trendline is bearish, and chances are we will test support around 20600 area.
All the best!
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