Hong Kong’s Hang Seng index broke above a short-term downside resistance line drawn from the high of February 23rd. The price is now trading above a short-term tentative upside support line taken from the low of March 9th. Although there is a good indication we might see the index moving higher in the near term, we would still prefer to wait for a pop above the 29403 barrier, which is currently acting as a strong resistance area. For now, we will take a cautiously-bullish approach.
A strong move above the 29403 barrier, marked by the high of March 8th and today’s current high, could open the door for a further acceleration, which might lead the index to the 29876 hurdle, marked by the current highest point of March. That hurdle may provide a temporary hold up for Hang Seng, maybe even forcing it to correct a bit lower. However, if the price remains above the previously-mentioned upside line, the bulls might regroup and take charge again. If so, the index could revisit the 29876 area, a break of which could clear the way towards the 30395 level, marked by the high of February 25th.
The RSI is currently flat, but remains above 50, indicating positive price momentum. The MACD, although fractionally below zero, is sitting above its trigger line and continues to point higher. The MACD shows that the price may start gaining upside speed soon, which may come inline with the above-discussed scenario.
Alternatively, if the previously-mentioned upside line breaks and the price falls below the 28701 zone, marked by yesterday’s low, that may increase the chances for Hang Seng to slide even further. The index could fall to the current lowest point of March, at 28034, or to the low of January 29th, at 28034. The latter may provide a temporary hold-up, however, if the bears are still strong, the next potential target could be at 27752, marked by the low of January 11th.
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