Hang Seng Index Bears Fed by Soaring US-China Tensions

Mounting tensions between the U.S. and China are killing any hope for a bullish turn in Hong Kong's Hang Seng Index...

Trade War (4)

Mounting tensions between the U.S. and China are killing any hope for a bullish turn in Hong Kong's Hang Seng Index.

As expected, Beijing has just passed a controversial national security law which is widely expected to erode Hong Kong's autonomy.  

Following the U.S. government's official declaration Wednesday that Hong Kong is no longer autonomous from China, President Donald Trump announced plans to hold a Friday press conference on China. Without giving details on what he will say in the press conference, Trump said: "We'll be announcing tomorrow (Friday) what we're doing with respect to China, (...) we're not happy with China."

It is widely speculated that sanctions against the Chinese government and individual Chinese officials will be on the action plan.

Just after Trump's announcement of his Friday press conference, U.S. stocks erased gains to close in the red.

Needless to say, Bears of Hong Kong's stock market are jumping in joy.

Will Trump still call Chinese President Xi Jinping his friend?


On a Daily Chart, the Hang Seng Index keeps drifting lower.


Source: GAIN Capital, TradingView


Being capped by the 20-day moving average, it has sunk to the Lower Bollinger Band keeping the short-term bias as bearish.

Relative strength index is badly directed at 40, suggesting a lack of upward momentum for the Index.

Technical configuration still favors a bearish bias.

And Downside Support could only be located at 22100 and 21100 (around the low seen in March).

A Bullish Reversal would only come when the Key Resistance at 24200 is surpassed (i.e. filling back the bearish gap formed last Friday May 22).

More from Indices

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.