The technical picture of Hang Seng shows that from the end of November, the index has been forming lower highs, which suggests that the buyers are failing to push the price to February and January highs. That said, the index continues to balance above the 26250 hurdle, which is marked near the lows of November 19th, December 7th and 10th. In order to aim for lower areas, a break of that hurdle is needed. Until then, we will take a cautiously-bearish approach.
If the 26250 zone surrenders, this will confirm a forthcoming lower low, potentially sending the price to its next possible support area, at 25931. Hang Seng might stall there, or even correct up a bit. However, if the index is not able to get back above the 25931 territory, another slide could be possible. If this time Hang Seng is able to overcome the 25931 hurdle, the next target may be at 25558, marked by the low of November 6th.
The RSI has just moved below 50 and continues to point lower. The MACD is also pointing slightly to the downside, despite sitting slightly above its trigger line. However, the MACD remains below zero. The two indicators are showing negative price momentum, which supports the above-discussed scenario.
Alternatively, if the index is able to overcome its short-term tentative downside resistance line drawn from the high of November 27th, that might attract a few extra buyers into the field, especially if the price rises above the 26925 barrier, marked by the current highest point of December. We will then aim for the highest point of November, at 27070. If the buying doesn’t stop there, the next possible aim could be either the 27213 obstacle, or the 27450 level, marked by the high of February 21st.
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