Chart of the day: HKEx: 2018 breakdown from key neckline
Chinese smartphone component manufacturers all started breaking down on Friday as if there were some major news in the works. Well...Google announced on Sunday it is revoking Huawei's Android license... Given sales to Huawei and Chinese smartphone manufacturers are a key source earnings and growth, this news should have a major impact on the price action.
In 2018 case, you can see Friday's price action resulted in a breakdown from a intermediate wedge pattern and an impending violation of a major neckline for the stock. Traditionally, the downside objective would be equal to the height of the top, in this case, it would imply negative value which is clearly illogical. Nevertheless, this is geopolitically driven price action, so we can only hang on for the ride (ie. if you are short) till it reaches its logical conclusion.
In 2018 case, you can see Friday's price action resulted in a breakdown from a intermediate wedge pattern and an impending violation of a major neckline for the stock. Traditionally, the downside objective would be equal to the height of the top, in this case, it would imply negative value which is clearly illogical. Nevertheless, this is geopolitically driven price action, so we can only hang on for the ride (ie. if you are short) till it reaches its logical conclusion.