Last week, the Hang Seng 50 index exited its wide range, which was roughly between the 23351 and 24878 levels, through the lower bound of it and continued to slide during the Asian morning today. But before the end of today’s Asian trading session, the index managed to recover and close the day slightly in the positive territory. Given today’s sharp reversal, there is a possibility to see some more upside in the near term. That said, if the price struggles to get back above the 23351 zone, this upmove will be seen as a temporary correction, possibly resulting in another round of selling.
A push higher could bring Hang Seng 50 closer to the lower bound of the range, at 23351, which may halt the uprise. If the bulls struggle to lift the index above that area, the bears might take advantage of the higher price and send it back down again. Hang Seng may slide towards the current low of this week, at 22502, a break of which could clear the way to the 22346 hurdle, or even the 22054 level, marked by an intraday swing high of March 23rd.
Looking at our 4-hour chart, the RSI has recently rebounded from the 20 territory, however it still remains below 50. The MACD has turned a bit flat, but still sits below zero and its trigger line. Both indicators could well support our idea of a small correction, before another leg of selling.
Alternatively, in order to shift our attention to some higher areas, we would like to see a move back above the 23469 barrier, marked by the low of May 15th. But even then, the only upside, which we will consider will be within the previously-mentioned range. A further drift north could test the 23994 obstacle, a break of which may send Hang Seng 50 to the 24286 zone, marked by the lows of May 19th and 20th. Initially, the index might stall there, but if the buyers are still feeling comfortable, another uprise could bring the price to the 24669 zone, or even the 24878 level, marked by the high of May 20th and the highest point of April respectively.
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