Short Term Outlook of Hang Seng Index: Gap Up and Break the Trend line.

Hong Kong's Hang Seng Index jumped around 2% following the rise of the U.S. market last Friday.....

Uptrend 2

Hong Kong's Hang Seng Index jumped around 2% following the rise of the U.S. market last Friday. In Asia Pacific, Japan's Nikkei Index was up around 1.4% and Australia's ASX200 Index climbed around 1.7%.

China's central bank pledged "more powerful" policies to deal with unprecedented economic challenges caused by the Covid-19 pandemic. As Hong Kong's market is highly correlated to China, it would be positive news to the Hong Kong market also.

Investors should focus on China's April CPI (3.7% expect), PPI (-2.5% expect), industrial production (+1.5% expect) and retail sales (-6.0% expect) this week.

On a Daily chart, the index posts "Gap up" and breaks above the declining trend line drawn from January. It would be a very strong signal to call for the upward acceleration. Besides, the 20-day moving average is very close to the 50-day one. It is highly possible to indicate a bullish cross signal, which should enhance the positive outlook. In addition, the RSI is still heading upward, suggesting the upward momentum for the index prices.

Hence, as long as the previous low at 23600 is not broken, the index prices could consider a further upside to the resistance levels at 25000 (the gap occurred on March 12) and 26000 (the gap created on March 9).

Alternatively, a break below 23600 would erase the bullish outlook and test the support level at 22700.

Source: GAIN Capital, TradingView

More from Indices

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account