ALL stock markets have primary downward trends followed by primary upward trends followed by primary downward trends etc. What stock market players want to know is how long will a trend last and at what number will the current trend end, on the Hang Seng Index, or on the index in any other market.
The method I have found, which is about 96 per cent accurate, is to take the last high on the index and identify the number of points it fell before the trend turned and started rising.
To determine how high the new primary upward trend will go before the turning point, consider the number of points the last primary trend fell (which you have already identified), then multiply this number by 0.382, add the index number at the bottom of the last trend turning point and this tells when the rise will end on the index. Sometimes the rise is so powerful it goes through the number.
In this case do exactly as before but multiply by 0.618 instead of 0.382 and if it goes through that number, repeat the same mathematics only use 1.382 as the multiplier.
This is not an original system. It was first explained to me when I lived in Australia in the 1960's. The Australian All Ordinaries was at 428.14 on April 30, 1969 and fell to 369.14 on September 3, then turned up. It was a fall of 59 points. The calculation was: 1.382 x 59.00 = 81.53 + 369.14 = 450.67.
The rise went to 448.31 (just 0.05 from our calculation) and turned down. We then did the mathematics in reverse (subtracting 448.31 instead of adding and using 1.618 as the multiplier) and the next turning point was 320.25, whereas our calculation was 320.22, almost exact.
