Price is currently testing support within a longer term uptrend. In the short term, selling pressure is evident though the 22300 support appears to hold. And it may well be the level that determines the direction of trend, for at least the next few months.
For the longer term uptrend to continue, the 22300 support level has to hold. It is the minimum level to make a base as:
1) Price has spent 5 months above it;
2) Upward momentum has stalled as the black trendline (chart 2) is broken and a level below it will allow short term downtrendline to be drawn on the chart (blue parallel line in chart 2);
3) The lowest RSI level since May10, a lower RSI level at higher price suggest strength, if the level holds; and
4) High probability of cycle turning down should price trade below it.
The prior trend will be given the benefit of doubt, which is up. The holding of 22300 support will keep trend intact though it needs price above 25000 to confirm it. Should the level is violated; expect selling to continue, at least for the next few months and likely to be within the blue parallel line. Should the current cycle duration holds, next bottom is expected from late March. Next support will be last year’s low of 19000.
Also, HSBC continue to trade higher and the fact that a bank continue to gain market share, economy should be on the right track, provided the rest follow the lead.
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