The Hong Kong market’s most followed barometer, the Hang Seng Index (HSI) fell below its 200-day moving average on July 8, 2021, and has continuously weakened since then, despite temporary rebounds now and again. As the HSI fell below its 200-day moving average, it also broke below a thrice tested support at the 27,700 to 27,800 range. The break below this support indicates a downside of 24,400 to 24,500. This has yet to be met and remains valid. The HSI tested a low of 25,086 before rebounding.
The HSI’s directional movement index indicators are negative, with ADX rising, and DIs negatively placed. However, quarterly momentum and 21-day RSI have turned up from oversold lows suggesting that a temporary rebound is underway for the Hong Kong market. The current rebound is a reaction to oversold readings, and likely to encounter resistance before the index approaches the breached 200-day moving average, currently at 27,858.
The Straits Times Index has shown remarkable resilience despite continued concerns and negativity on the economic and fundamental outlook. The Index ended the week at 3,166, up a mere nine points week on week. However, the Straits Times Index -which ended the week at 3,166- continues to hold above its 50- and 100-day moving averages which are at 3,144 and 3,152 respectively.
Quarterly momentum remains at a several-times tested resistance at its equilibrium line and appears poised for a breakout. This in turn would would propel prices higher. Directional movement indicators are neutral. The breakout level for the index is at 3,178. A break below the 50- and 100-day moving averages would deter and defer a breakout.
