Hang Seng Index – Monthly Chart: Testing significant supports
- The index is testing the 250-month (red line) moving average which is around 20,616 now and the lower boundary of a bullish channel (green lines, formed since 2009) at around 20,530.
- From the monthly perspective (long term view), 250-month moving average is very important because Hang Seng index never been able to break below it since 2008.
- On the other hand, the long-term bullish channel (green lines) also plays support role sine 2009. even 2011 and 2016 lows not able to close below it from monthly close.
- In this case, it is quite significant to see whether Hang Seng Index will close below it this month, or at least weekly close.
- As monthly RSI is below 40% now, indicating that the index is relatively cheap from long-term view. I keep my view that investor can consider continue monthly stock contribution for 2800.HK for long-term investment.
Hang Seng Index – weekly: Where are next supports
- From weekly chart, the index broken below a long-term trendline (pink line, formed since 2008) 2 weeks ago and accelerated on the downside.
- We can see that the index open with a bearish gap on Monday and has broken below 2020 low with a black candle on Tuesday close.
- It is currently testing the 250-month MA (around 20,616), which plays significant role since 2008.
- Weekly RSI and MACD is also turning down.
- If in case the index failed to support by 250-month MA and bullish channel bottom this Friday close, the next key support will be 19,594 (2016 May low) and then 18, 278 (2016 low).
Hang Seng Index – Daily: Oversold now, a ST technical rebound cannot be ruled out.
- From daily view, Hang Seng Index turned down below the upper boundary of a broadening formation pattern (pink lines) with a double-tops pattern.
- After broken below the neckline of double tops pattern at 23,470, HSI hit its measured target at 21,890 last Friday.
- The index has broken below the lower boundary of a broadening formation pattern (pink lines) with a bearish gap on Monday and continued drop on Tuesday. It is now testing the 250-month moving average around 20,616.
- Showing that the double tops pattern is quite success this time as many successful double tops pattern normally drop far lower than its measured target (21,890).
- However, the daily RSI is oversold now at 21.13%, a technical rebound above the 250-month MA cannot be ruled out. The next resistance will be 21,327 (lower boundary of bearish gap) and 21890 (measured target of double tops pattern + near upper boundary of bearish gap.)
- However, unless we see a bullish reversal pattern form. Otherwise, we still keep the negative view even a technical rebound post.
Where is last stand for HSI from technical view?
- As the recent rapid drop is mainly driven by Ukraine war, the market is very volatile and difficult to predict where is low.
- However, from a technical point of view, if in case Hang Seng Index break below 250-month MA (red line) and drop further. The last stand will be the very long-term bullish trendline (formed since 1989), estimated to be around 17,200.
- This trendline has been playing a key support for every extreme low for the past 33 years. Supporting 1989, 1990, 1998, 2003 and 2008 lows.
- Therefore, it will be the last stand from a technical view for HSI. We cannot imagine if it even close below this trendline with black candle and monthly close.
Joyce Chan CMT, CFTe
UOB Kay Hian Hong Kong