Looking at the technical picture of the Hang Seng 50 cash index on our daily chart, we can see that, recently, the price found good support near the 20950 zone, from which it rebounded strongly. In addition to that, today the index managed to break above its short-term steep downside line, drawn from the highest point of March. Although Hang Seng 50 is showing willingness to move a bit higher, still it would need to overcome the 23400 barrier first, before we may examine further upside. That said, even then, the upside might get limited near another downside line taken from the high of February 17th, hence why, overall, we will still remain somewhat bearish.
As mentioned above, in order to consider a bit more correction to the upside in the near term, we would like to see a break of 23400 barrier, which is near the highs of March 17th and 18th. If so, Hang Seng 50 could drift a bit further north, but if it struggles to overcome the previously-discussed downside line from the high of February 17th, this might result in another round selling, meaning that the bears may have taken advantage of the higher price. The slide could bypass the previously-mentioned 23400 hurdle and target the 22345 zone, which is today’s low. A further decline may send the index towards another possible support area, at 20950, marked by the current lowest point of March.
Our oscillators, the RSI and the MACD, are showing signs of bottoming, which may support the idea of seeing some correction to the upside in the near term. However, despite both indicators pointing higher, the RSI is still below 50 and the MACD remains below zero and its trigger line. This may somewhat come in line with the idea of staying bearish overall.
Alternatively, if the aforementioned slightly flatter downside line breaks and the price moves above the 25450 barrier, marked by the high of March 11th, this could attract even more buyers into the game. That’s when we will start aiming for the 26767 obstacle, or even the 27213 hurdle, marked by the low of February 21st. If the buying doesn’t stop there, the next possible resistance level to consider could be at 28068, which is the highest point of February.
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