The technical picture of the Hong Kong’s Hang Seng index on our 4-hour chart shows that the price has been drifting lower from the end of June. Hang Seng index is now trading below a short-term tentative downside resistance line taken from the high of June 28th. But yesterday, after finding strong support near the 26856 hurdle, the index reversed higher and is now seen going for a larger correction higher. However, if the downside line stays intact, another push lower could be possible.
As mentioned above, a further move higher might bring the index closer to the aforementioned downside line, which if continues to provide resistance, might attract more sellers into the game, as they could take advantage of the higher price. Hang Seng may then fall back to the 27425 hurdle, or even to the 26856 zone, marked by the current low of this week. If the bears are still strong and they are able to overcome that support zone, this would confirm a forthcoming lower low, potentially clearing the way towards the 26705 obstacle, or to the 26543 level, marked near the high of December 28th and near an intraday swing low of December 29th.
At the time of writing, the RSI and the MACD are both pointing slightly higher. That said, the RSI still sits below 50 and the MACD remains well below zero, despite climbing a bit above the trigger line. The two oscillators seem to support the idea of seeing a small corrective move higher, before another possible leg of selling, as overall, the indicators show negative price momentum.
Alternatively, if the previously mentioned downside line breaks and the price rises above the 28011 barrier, marked by the high of July 7th, that might invite a few extra buyers into the game, possibly setting the stage for further advances. Hang Seng could then rise to the 28412 obstacle, a break of which may set the stage for a push to the 28701 level, marked by the low of June 30th.
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