Hexun Investment Advisor Feng Lushun: On March 12, what is the next move for the Hang Seng Tech Index?

Today is March 12th. Let’s analyze the trend of the Hang Seng Tech Index. Today, the Hang Seng Tech closed with a volume-reduced doji star, a candlestick pattern often indicating that the market is about to face a trend reversal. So, the question is: will it turn upward or downward? We will analyze this using volume and price relationships.

First, from an overall structure perspective, the Hang Seng Tech Index has experienced a prolonged decline, falling from 6,700 points to over 4,700 points, a total drop of more than 30%. Both the downward space and the adjustment time have been quite sufficient. At this level, is it possible that the index has bottomed out?

We can use Gann theory to make a prediction. From Gann’s perspective, this month the index has touched the lower limit position, near that green line. Historically, every time the index breaks below this green line, a rebound occurs. But whether the rebound can turn into a reversal depends crucially on whether major funds are entering the market. Gann theory can predict key levels, but whether prices will rise ultimately depends on market sentiment and capital flow.

Looking at volume, recently there has been a large-volume bullish candlestick, which is a noteworthy signal. Generally, when a volume surge appears at the bottom, it indicates that major funds are starting to act. To judge an upward trend, we must always pay attention to support levels. During this rally, where is the support at the bottom? We can identify a significant large bullish candle and use its opening and closing prices to define a support zone. From the actual trend, the index has tested this zone multiple times and found support, then rebounded, indicating this support is effective.

Another key factor in an upward trend is whether resistance levels can be broken. Currently, the first resistance is at the 5-week moving average. Only if the index stabilizes above the 5-week MA can it have a chance to challenge the 5-month line. On the daily chart, the MACD indicator has already formed a golden cross and shows red histogram bars, but the strength is not yet strong, and it is still below the zero line. Historical experience shows that a golden cross below the zero line often results in limited rebound strength. Therefore, the index needs to continue upward, pushing MACD above the zero line to confirm a trend reversal.

In terms of trading strategy, the focus should be on the 5-day moving average. As long as it remains intact, you can hold positions or buy on dips along the 5-day MA. Near the 5-week line, consider taking profits appropriately. In simple terms, sell near the 5-week line and buy on dips near the 5-day line, maintaining good rhythm.

(Edited by: Zhang Yan)

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