Hang Seng Tech at risk of deeper losses after trend break

• Failed breakout above October downtrend triggered sharp bearish unwind
• Break beneath March uptrend leaves 4800 support firmly in focus
• Nvidia earnings may matter less for China tech than regional AI peers

China tech continues to lag peers

Hong Kong’s Hang Seng Tech index has been hammered since last Thursday, with a failed breakout combining with renewed questions around earnings, outlooks and valuations across parts of Asia’s AI complex to trigger a sharp bearish unwind.

The move lower accelerated alongside sharp reversals in South Korean and Taiwanese tech late last week, with investors booking profits after huge runs earlier in the year. While Hang Seng Tech has underperformed for months, the broader deterioration in regional risk appetite only added to the pressure.

Failed breakout triggers bearish unwind

Source: TradingView

Technically, the false break above the October 2025 downtrend sowed the seeds for what followed next. The price stalled above the 100DMA before delivering a bearish reversal candle only a day after an equally impressive bullish candle, hinting that bulls may be in trouble. The price action since has confirmed as much, with the index breaking beneath minor support at 5020 before busting uptrend support that had been in place since the March lows.

The bearish unwind eventually stalled ahead of 4800 support on Monday before bouncing in early trade on Tuesday. However, given the preceding price action, the risk of the bounce fizzling remains elevated, making 4800 the immediate reference point for traders to watch today.

If we see a retest and bounce from near the level again, longs could be set with a tight stop below for protection, targeting either the former uptrend or former horizontal support at 5020.

Should the bearish move extend beneath 4800, it would allow the setup to be flipped, with shorts set on the break with a tight stop above, targeting the March lows of 4620. The merits of this setup would be improved were we to see a back-test and rejection from 4800 before entry.

The oscillators have rolled over like the price action recently, but the overall messaging is neutral when it comes to directional risks.

AI sentiment faces another key test

While Nvidia's earnings report after the closing bell on Wednesday will impact sentiment across AI names in other markets in Asia and the US, whether it will influence Hong Kong's tech sector remains debatable given it’s been trending lower for over six months while markets in South Korea, Taiwan and the US have ripped higher. Perversely, the reaction to Nvidia's earnings report may be the opposite for China's AI names, carrying the power to influence capital flows between these markets depending on their respective relative outlooks.