Hang Seng Index, Head and Shoulders, and triangle

For educational purposes only, not intended as trade/investment advice.

Had briefly touched upon the Hang Seng Index's weakness in an earlier post on Tencent. Tencent is apparently a well run company that constitues 10.75% of the Index, and my basis of being bearish on the Tencent chart was the weakness in the index itself.

HK50 has broken below a large and tall H&S pattern that has been in formation since early 2017. It also appears to have formed and broken downwards from a symmetrical triangle formation. 

The fact that the neckline is sloping upwards, and that the breakout is with a gap lower suggests that the performance (falling down) after the neckline break will be sizable.  

Per the measure rule of price targets, we should see a level of just under 17000 on the Hang Seng Index, a fall of 26%. However, as per Bulkowski this level is reached about 45-53% of the times, and thus one needs to be cautious before shorting for an ambitious target as is seen here.

So for the target I looked at the nearest demand zone, which is at 19670-20421 (spread of 3.82%). So I  would look for the target of 20421 from the current levels of 22930, a gain target of 10.94%. (ie index will fall by 10.94%).