Keep Watching Hong Kong...US Says HK Loses Autonomy...What's Next?
Ming Lam May 28, 2020 3:42 AM
It is quite sure that the U.S. Congress will revoke Hong Kong's special trade status...
On Wednesday, the U.S. government officially declared that Hong Kong is no longer autonomous from China -- just one day after President Donald Trump said "We're doing something now" regarding China's plans to impose a "new" national security law on the city.
In a State Department press release, U.S. Secretary of State Mike Pompeo pointed out: "After careful study of developments over the reporting period, I certified to Congress today that Hong Kong does not continue to warrant treatment under United States laws in the same manner as U.S. laws were applied to Hong Kong before July 1997, (...) No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground."
While it is quite sure that the U.S. Congress will revoke Hong Kong's special trade status, market participants are expecting further actions to be taken by the U.S.,...and by China.
What is certain amid those uncertainties? The U.S.-China relationship is deteriorating.
And it is very difficult to establish a Bullish View for Hong Kong's stock market.
On a Daily Chart, the Hang Seng Index shows no intention of posting a sustainable rebound.
Source: GAIN Capital, TradingView
Still, the Index has not yet filled back a large Bearish Gap formed last Friday (May 22).
The descending 20-day moving average, which is below the 50-day one, is capping the Index's upside potential.
Looking to the downside, Support is only expected at 22100 and 21100 (around the low seen in March).
Only return to the Key Resistance at 24200 (i.e. filling back the bearish gap) would bring about a Bullish Reversal.
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