Hang Seng Index Bears Fed by Soaring US-China Tensions
Ming Lam May 29, 2020 6:30 AM
Mounting tensions between the U.S. and China are killing any hope for a bullish turn in Hong Kong's Hang Seng Index...
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).
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