Hang Seng Index (HSI IND)
The index hit our first downside target at 23,484 and rebounded from the long-term bullish trendline (orange line, formed since 2008). The weekly RSI is turning up below its neutrality level at 50%. The MACD is flat, indicating downside momentum is weakening. However, there have been a few resistances on the upside, which should limit upside potential. The lower boundary of the triangle pattern (blue line, formed since Dec 16), neckline of the head and shoulders pattern (pink line), 250-week (purple line) moving average and previous top at 25,847
would play key resistance roles on the upside. Based on the above mentioned, we expect the index to move sideways between the previous low of 23,124 and previous top at 25,847 in the coming weeks.
Investors can make a long entry now and sell when the index is near the previous top at 25,847. Use 23,124 (previous low) as a stop to control risk.
Support: 23,124 (previous low + around LT bullish trendline) and 21,659 (overlapped area since 2014).
Resistance: 25,847 (previous top), 250-week moving average (around 25,849), 26,782 (July 20 top).
Joyce Chan, CMT, CFTe