Hang Seng Index (HSI IND)
Caution: Testing lower boundary of bullish channel
The index failed to break above the upper boundary of the bullish channel (black line), 250-week moving average (purple line) and neckline of a former head and shoulder pattern (pink lines) and is testing the lower boundary of the bullish channel now. The weekly RSI is turning down below its neutrality level at 50%. The MACD histogram is also turning down, while the MACD histogram is narrowing.
In these perspectives, we are cautious now and watching closely. As long as the lower boundary of the bullish channel remains intact, a technical rebound towards the 250-week moving average (around 25,770) is likely. Alternatively, a break below the bullish channel would call for a further drop towards the next support at 23,484 and even 22,519 (May 20 low) in extension.
Investors are recommended to wait for a bullish reversal candle above the lower boundary of a bullish channel first before a long entry. If prices break below the bullish channel, investors can accumulate stocks around the next support at 23,484.
Support: Lower boundary of bullish channel (around 24,160), 23,484 (overlapped horizontal level since Mar 20) and 22,519 (May 20 low).
Resistance: 250-week moving average (around 25,770), 26,782 (around neckline of former H&S pattern + Jul 20 top).
Joyce Chan, CMT, CFTe