Hang Seng Index Technical Outlook: Strong Upward Momentum

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Hang Seng Index, Hong Kong Equities, HSI – Technical Outlook:

  • Upward momentum within the Hang Seng Index is strengthening.
  • Rising odds that the worst might be over for HK/China shares.
  • What are the important thing ranges to look at?

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HANG SENG INDEX TECHNICAL OUTLOOK – BULLISH

Higher highs registered on the weekly charts means that the Hang Seng Index’s development stays up on optimism associated to China’s financial reopening.

The Hang Seng Index (HSI) rose to a brand new six-month excessive final week (Hong Kong markets reopen on Thursday after the Lunar New Year holidays). This coupled with still-strong upward momentum on the day by day charts (the 14-day Relative Strength Index is above 75) confirms that the short-term development is bullish.

Hang Seng Index Daily Chart

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Chart Created Using TradingView

As identified within the earlier replace, the index has achieved the value goal of a reverse head & shoulders sample triggered final month – state of affairs 2 highlighted in November – the break mid-December above resistance at 18415 triggered the bullish sample (the left shoulder is the early-October low, the top is the end-October low, and the best shoulder is the November 22 low), paving the way in which towards 21800, the goal of the sample. The Hang Seng Index is now approaching one other barrier on the April and July 2022 highs of 22450-22500. Any break above might open method towards the 200-week shifting common (now at about 24875).

Hang Seng Index Weekly Chart

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Chart Created Using TradingView

From a medium-term perspective, the robust rebound from the tip of final yr raises the chances that the worst might be over for HK/China shares. The index has retraced 100% of the July-October 2022 slide – an indication that bears are getting exhausted. This is additional strengthened by the surge in inflows this month as China’s ending of its zero-Covid coverage is prompting re-rating of financial development prospects (see desk highlighting the broader narrative).

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— Written by Manish Jaradi, Strategist for DailyFX.com





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