Short Term Outlook of Hang Seng Index: Gap Up and Break the Trend line.

Hong Kong's Hang Seng Index jumped around 2% following the rise of the U.S. market last Friday.....

Uptrend 2

Hong Kong's Hang Seng Index jumped around 2% following the rise of the U.S. market last Friday. In Asia Pacific, Japan's Nikkei Index was up around 1.4% and Australia's ASX200 Index climbed around 1.7%.

China's central bank pledged "more powerful" policies to deal with unprecedented economic challenges caused by the Covid-19 pandemic. As Hong Kong's market is highly correlated to China, it would be positive news to the Hong Kong market also.

Investors should focus on China's April CPI (3.7% expect), PPI (-2.5% expect), industrial production (+1.5% expect) and retail sales (-6.0% expect) this week.

On a Daily chart, the index posts "Gap up" and breaks above the declining trend line drawn from January. It would be a very strong signal to call for the upward acceleration. Besides, the 20-day moving average is very close to the 50-day one. It is highly possible to indicate a bullish cross signal, which should enhance the positive outlook. In addition, the RSI is still heading upward, suggesting the upward momentum for the index prices.

Hence, as long as the previous low at 23600 is not broken, the index prices could consider a further upside to the resistance levels at 25000 (the gap occurred on March 12) and 26000 (the gap created on March 9).

Alternatively, a break below 23600 would erase the bullish outlook and test the support level at 22700.

Source: GAIN Capital, TradingView

Build your confidence risk free

More from Indices

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

StoneX Financial Ltd (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.