- The Hang Seng index has rallied slightly during the trading session on Tuesday, as we continue to threaten a significant chart level.
- The 200-Day EMA since just above, and then after that the HK$20,000 level is found.
- Ultimately, I think it is an ideal area to find massive resistance, so it’s interesting to see that we are just struggling a bit in this area.
The question at this point is going to be whether the market can find some type of catalyst to go higher. If it cannot, then we may be in the beginning of a selling opportunity, therefore the market could find itself down at the HK$19,000 level quickly, perhaps down to the 50-Day EMA, which currently sits at the HK$18,000 level.
Market Might Face a lot of Noisy Behavior
It’s also worth noting that we are stuck between the 50-Day EMA and the 200-Day EMA, generally a zone where you start to see a squeeze in one direction or the other. I think we probably get some type of decision soon, but in the meantime, we might have a lot of noisy behavior. If we do break above the HK$20,000 level, that could open a move to the HK$22,000 level next.
Looking at the start, you can see it’s been a nice rally, but now we are facing the next block of noise, and therefore there’s going to be any place where we start to sell off, it’s going to be right here. It’s possible that you may see a bigger move in the Hang Seng than you would in some other indices this time year because there will be more liquidity. After all, most Western traders are worried about holidays once you get past the 15th.
At this point, I would say that we are essentially in a HK$1000 range, between HK$19,000 and HK$20,000, and I will look at that as a consolidation rectangle that once we break out of, we probably have a bit more clarity as to where we’re going next. The Federal Reserve has a meeting on Wednesday, which could have a bit of an effect on the US dollar. Remember, the Hong Kong dollar is pegged to the US dollar, so essentially, it’s the same thing as saying Hong Kong has a central bank meeting as well.
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