EME HEADER

HONG KONG – SUNAC CHINA HOLDING

SUNAC CHINA HOLDING (1918.HK)

A new chart pattern breakout signal is triggered on Hong Kong listed SUNAC CHINA HOLDING. After its 6th test, SUNAC broke out of a year-long rectangle with a strong daily bar and increasing volume. If the stock manages to hold on to gains by the end of the week, it will also register a strong weekly close. Breakouts from horizontal trading ranges are usually reliable. Today’s strong close pushed the price well above the horizontal resistance at 6.05 levels and the breakout confirmation level at 6.23. A long trade is entered with stop-loss at 5.90. Rectangle chart pattern price target stands at 7.7 levels. Failure to hold above 6.05 levels in the following days/weeks will put the bullish interpretation in question.

SUNAC CHINA HOLDING - WEEKLY SCALE

SUNAC CHINA HOLDING – WEEKLY SCALE

SUNAC CHINA HOLDING - DAILY SCALE

SUNAC CHINA HOLDING – DAILY SCALE

DME HEADER

GERMANY DAX INDEX

GERMANY DAX INDEX - DAILY SCALE

GERMANY DAX INDEX – DAILY SCALE

Germany’s DAX Index breaks out of a 4 month-long rectangle chart pattern with a possible break-away gap. Tech Charts blog drew attention to the developing chart pattern in the last week of November (Germany Dax Index – 20/11/2016). Today’s price action cleared the strong 4 month-long horizontal resistance at 94.60 levels. For common stocks, Edwards and Magee in their book Technical Analysis of Stock Trends suggest that for a breakout confirmation a daily close by a 2.5%-3% margin above resistance level is required. While, this margin can be perfectly fine for stocks, for indices, commodities and currencies it could result in a delayed entry. More appropriate threshold could be a daily close by a margin of 0.5%-1% above the resistance area for indexes, commodities and currencies.

Breakout on Germany’s DAX index cleared that threshold (grey dashed line at 10,910) with a strong daily close and confirmed the breakout from the 4 month-long rectangle chart pattern. Rectangle is a continuation chart pattern. Breakout not only took place with a strong daily close but also with a possible break-away gap. Richard Schabacker in his pioneering research (Technical Analysis and Stock Market Profits) on classical charting, explains break-away gaps as follows:

Break-away gap appears at the beginning of a movement and generally comes at the completion of some definite area formation. It is seldom covered for some time in the future and, when it proceeds from a strong major bottom formation, it may never be covered, or at least not until the return of prices in the next great cycle some years later. The Break-away gap is comparatively uncommon and indicates a definite change in the technical picture…The logical conclusion is, therefore, for a continuation of that strong movement in the direction toward which the gap was made.

As a matter of fact, it is always difficult and frequently impossible to be certain whether a gap is of the Common or Break-away variety at the instant that the gap appears. This is the principal reason why we cannot place too much credence in the various gap theories and why we must consider gaps as of only secondary importance in forecasting. The fact remains that most gaps which lead decisively out of an established pattern are not closed; they become and remain true Break-away gaps. And the wider the Break-away gap at the breakout, the less likely it is to be closed.

In brief, the Break-away gap emphasizes the breakout of prices and indicates a sudden change in the technical picture, but the mere fact that prices have broken decisively out of a technical formation is of greater importance than the gap. When the evidence of the gap is added to all the other evidences of a decisive breakout, we are encouraged to act promptly and decisively.

For stock traders, I attached below the ISHARES DAX UCITS ETF that is listed in Germany. Price chart of the ETF is very similar to the index as it tracks the performance of the XETRA DAX index. The upper boundary of the rectangle was standing at 94.60. With the decisive breakout I initiated a long position with a stop-loss slightly below the boundary at 93.30 levels. Rectangle chart pattern price target is at 100 levels for the ISHARES DAX ETF. Tech Charts twitter followers can find chart pattern breakout signals under #TECHCHARTSALERT

ISHARES DAX UCITS ETF - DAILY SCALE

ISHARES DAX UCITS ETF – DAILY SCALE

PORSCHE AUTO HOLDING (PSHG_p.DE)

Strength in European equities can gain momentum. A chart that is currently on my watch list is PORSCHE AUTO HLDG  listed in Germany. Stock is possibly forming a year-long symmetrical triangle that could act as a bottom reversal if the price can clear strong resistance area between 49.65 and 50. A decisive close above 50.85 levels will confirm the breakout from the long-term sideways consolidation. Tech Charts twitter followers can find developing chart patterns under #TECHCHARTSWATCHLIST

PORSCHE AUT HLDG - WEEKLY SCALE

PORSCHE AUT HLDG – WEEKLY SCALE

announcement-header

ANNOUNCEMENT

Dear Tech Charts followers,

We received questions regarding the charting software I use to analyze global equity markets. I have been using MetaStock for the past 15 years. MetaStock has been a reliable software to provide access to global financial markets data.

I am pleased to announce that MetaStock has now agreed to offer discounts for Tech Charts followers including special offers for the data packages and discount on the software itself. To take advantage of this offer you can follow this link -> METASTOCK OFFER

Or call 800-882-3040 with the Promo Code: techcharts3for1

Regards,

Aksel Kibar

EME HEADER

HONG KONG and CHINA

China and Hong Kong listed equities had a strong performance over the past week. Hang Seng index rebounded from its 200 day average and the lower boundary of its possible 8 month-long upward trend channel. China SSE Composite index resumed higher trading above its 200 day average after clearing the horizontal resistance at 3,100 levels. Both Hang Seng index and China SSE Composite index can help emerging markets to gain strength in the coming weeks.

SSE COMPOSITE INDEX weekly scale price chart

SSE COMPOSITE INDEX weekly scale price chart

HANG SENG INDEX weekly scale price chart

HANG SENG INDEX weekly scale price chart

A new chart pattern breakout signal is triggered with a strong weekly close on the Hong Kong listed SHUN TAK HOLDING. Price chart of the stock completed a year-long text book H&S bottom. White long candlestick on the weekly scale chart not only cleared the year-long horizontal resistance but also recorded a high volume adding to the strength of the weekly scale breakout. H&S bottom chart pattern price target stands at 3.35 levels. A stop-loss is placed at 2.70 levels, slightly below the horizontal resistance (neckline). Tech Charts twitter followers can find all past breakout signals under the hashtag #TECHCHARTSALERT

SHUN TAK HOLDING weekly scale price chart

SHUN TAK HOLDING weekly scale price chart

SHUN TAK HOLDING daily scale price chart

SHUN TAK HOLDING daily scale price chart

Two stock charts are preparing for a long-term change in trend. Both names are in the Tech Charts watchlist. Breakout on these securities will trigger a chart pattern breakout signal and will be considered for possible long trades. Tech Charts twitter followers can find stocks that are in the watchlist under the hashtag #TECHCHARTSWATCHLIST China Galaxy Securities is a financial company listed in Hong Kong. The stock price is forming a year-long ascending triangle with the strong horizontal resistance standing at 8.10 levels. Breakout above 8.10 can confirm the ascending triangle as a reversal and suggest higher levels. Kingston Financial is also listed in Hong Kong. Stock price is challenging the upper boundary of a year-long symmetrical triangle. Breakout above 3.75 levels can start a new uptrend.

CGS weekly scale price chart

CGS weekly scale price chart

KINGSTON FINANCIAL weekly scale price chart

KINGSTON FINANCIAL weekly scale price chart

DME HEADER

GERMANY DAX INDEX

Germany’s DAX Index is forming a 4 month-long rectangle chart pattern. Rectangles are classified as continuation chart patterns. Breakouts are usually in the direction of the previous trend. Since the beginning of 2016, DAX index is in a uptrend. Since mid-August the index has been in a sideways consolidation between 10,200 and 10,800. The index tested the upper boundary of the rectangle for four times over the past four months. Breakout above 10,800 will be positive and suggest higher levels. Chart pattern price target stands at 11,400 levels.

WEEKLY SCALE PRICE CHART OF DAX INDEX

WEEKLY SCALE PRICE CHART OF DAX INDEX

DAILY SCALE PRICE CHART OF DAX INDEX

DAILY SCALE PRICE CHART OF DAX INDEX

There are DAX index futures contracts and index ETFs to trade the price action on the possible breakout. Below is the price chart of the Ishares DAX UCITS ETF (in EUR) listed in Germany. It is one of the most liquid instruments that tracks the performance of the DAX 30 index. On the Ishares DAX UCITS ETF, upper boundary of the rectangle stands at 94.60 levels.

DAILY SCALE PRICE CHART OF ISHARES DAX UCITS ETF

DAILY SCALE PRICE CHART OF ISHARES DAX UCITS ETF