Hong Kong’s HSI index was up 3.8% or 961 points all in one day. The high of the day was at 26,247.63, well above the rough target I had yesterday of about 25,800. The difference, as mentioned , may be accounted for by a slight throw-over, a normal event with these wedges.
It should now be assumed that this index has peaked!
For good measure we throw in a chart of the Shanghai index. This one is up a miraculous 100% or so in just one year, at a time when the economy is stalling a little.
This one may or may not be completely done but it certainly does not contradict our call on HK. Interest rates in China are still at 5.3% by the way.
Also for the benefit of the reader we have included (below) the chart of the CAC 40 where we encountered this same diagonal or wedge pattern, see June 6, 2014 blog on the left. We did not know how big it was but certainly the one shown in blue was perfect in all respects. This made the call to at least the base rather easy. It promptly did that and more. Than it shot up which we did not anticipate but that is a different matter all together. These patterns are extremely reliable and are ignored only at your peril. You can click on this chart and the one in the previous blog and make an easy comparison. Despite the fact that one is 1/2 year long and the other 3 and 1/2 years, the patterns are pretty much identical.