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Hang Seng Index Technical Analysis: 25,000 The Critical Level to Watch

Hang Seng Index Technical Analysis: 25,000 The Critical Level to Watch

Margaret Yang, CFA, Strategist

Hang Seng Index Technical Outlook:

Hong Kong’s Hang Seng Index (HSI) stock market benchmark is looking for support at 25,000, which is the upper ceiling of the ‘Ascending Triangle’ that it broke two weeks ago. Previous resistance has now become a critical support, breaking below which will probably lead to downside extension toward the 50-day Simple Moving Average (SMA) at 24,550.

25,000 is also close to the 50%Fibonacci retracement level (25,077) when a high in late January and low in mid-March are chosen to plot the study.

Holding above 25,000 could lead to some consolidation above this level and pave the way to challenge the next resistance at 26,048 – the 61.8% Fibonacci retracement level.

In the mid-term, HSI has formed a ‘golden cross’ on its daily chart, with the 20-Day SMA crossing above the 50-Day, and 50-Day crossing above the 200-Day in mid-June. The golden cross signals more upside in the mid- to long term,

Hang Seng Index – Daily Chart

Hang Seng Index Chart

The MACD indicator formed a ‘bearish crossover’ last week (circle on the chart), which suggests that near-term momentum is biased more towards the downside.

The Directional Movement (DM) indicator continued to shrink in its width since peaking on July 6, and could potentially form a ‘bearish crossover’ should price plummet below the support at 25,000 in the days to come.

Hang Seng Index – Momentum Indicators

Hang Seng Index Price Chart

--- Written by Margaret Yang, Strategist for DailyFX.com

To contact Margaret, use the Comments section below or @margaretyjy on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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