After 3 straight weeks of gains, the Hong Kong’s Hang Seng index is now seen to be correcting lower. The price is still trading above a short-term tentative upside support line taken from the low of December 23rd, so the current move lower might be considered as a temporary correction before another possible leg of buying. That is, of course, if the above-mentioned upside line continues to hold. For now, we will stay somewhat positive with the near-term outlook.
A further drift lower, below the highest point of January, at 30139, could clear the way towards the 29619 zone, marked by the high of February 9th. Slightly below it runs the aforementioned upside line, which if remains intact, might act as a good area for a rebound. If so, Hang Seng could bounce back to the 30139 hurdle, or even make its way further towards the 31113 area, marked by the current highest point of February. Initially, the price may stall there for a bit, however, if the bulls are still feeling confident, they might lift the index above that resistance area, this way confirming a forthcoming higher high and then targeting the 31590 and 31670 levels. Those levels mark the highest points of June and May of 2018 respectively.
Although the RSI and the MACD point to the downside, both indicators are still showing positive price momentum. The RSI remains above 50 and the MACD is above zero and its trigger line. The two oscillators seem to support the idea of a small setback before another possible move higher.
Alternatively, if the previously discussed upside line fails to hold and breaks, that may change the direction of the current short-term trend. Also, if the price slides below the 28686 hurdle, marked by the low of February 4th, that might clear the path to some lower areas. Hang Seng may drift to the low of January 29th, at 28034, where it could stall temporarily. That said, if the bears are still feeling comfortable, the index might break below the 28034 obstacle, this way confirming a forthcoming lower low and then sliding towards the 2744 zone, or even the 27070 level, marked by the highest point of November and the lowest point of January.
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