Hang Seng Index Pulls Back as Trade Deal Optimism Fades
Yesterday, Hong Kongs Hang Seng Index (Hong Kong 50 on FXOpen) climbed above the 23,600 mark, supported by progress made during USChina tariff negotiations.
However, today the Hang Seng Index (HSI) has dropped towards the 23,100 level, which may be explained by fading optimism that dominated the market a day earlier.
According to Reuters, Christopher Hodge, Chief Economist at investment bank Natixis, stated that these talks will yield nothing of long-term value. Ultimately, tariffs will still be significantly higher and will weigh on US economic growth.
Technical Analysis of the Hang Seng Index (HSI) Chart
Price movements are forming an upward trend channel (marked in blue), with the following features:
The price is situated in the upper half of the channel (a sign of demand), and the upper boundary appears to act clearly as resistance;
Yesterdays reversal suggests that bears became active above the former support area near the 23,385 level.
In this context, it is reasonable to assume that the Hang Seng Index (Hong Kong 50 on FXOpen) may test the support zone formed by the psychological level of 23,000 and the median line of the ascending channel. If the fundamental backdrop gives markets more reasons for caution, a deeper correction towards the lower boundary of the blue channel cannot be ruled out.
Read more: https://fxopen.com/blog/en/oa-hang-seng-index-pulls-back-as-trade-deal-optimism-fades/
Text source: Forex Trading Blog
