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.
