After a successful run north from the beginning of November, the Hang Seng index is stalling now near its key resistance area, between the 26737 and 26872 levels, which mark the highest point of July and the current highest point of this week respectively. At the same time, the Hong Kong index is trading well above a short-term tentative upside support line drawn from the low of September 25th. Although the price may continue moving further up, because of the recent steep uprise, we would prefer to wait for a push above the aforementioned key resistance area first, in order to get a bit more comfortable with the upside idea.
If Hang Seng ends up moving through the 26872 barrier, that will confirm a forthcoming higher high, potentially clearing the path to some higher areas. The index might then drift to the 27213 hurdle, a break of which may clear the path to the 27775 level. That level marks the high of February 20th.
The RSI and the MACD are slightly on the flat side, at the moment. However, the RSI remains above 50 and the MACD is still above zero and its trigger line. This shows that the price momentum is still positive and comes in line with the idea of waiting for a break above the 26872 barrier first, before targeting higher areas.
Alternatively, if the price reverses back down and moves below the 25895 zone, marked by the inside swing high of November 6th, that might spook the bulls from the field temporarily, as this may lead to a larger correction lower. A further slide could bring Hang Seng to the 25555 obstacle, a break of which might set the stage for a push to the 24962 level, marked by the highest point of October. Around there, the index may also get supported from moving lower by the previously discussed upside line.
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