Technical Analysis HK50 : 2021-07-30

[IFC Markets]

ecommendation for Hang Seng Index: Buy​

Buy Stop : Above 26369.8

Stop Loss : Below 25432.3



RSI : Neutral

MACD : Buy

Donchian Channel : Buy

MA(200) : Sell

Fractals : Buy

Parabolic SAR : Buy

Chart Analysis​

On the 4-hour timeframe the HK50, H4 has fallen below the 200-period moving average MA(200) which is falling still. We believe the bullish momentum will continue after the price breaches above the upper Donchian boundary at 26369.8. This level can be used as an entry point for placing a pending order to buy. The stop loss can be placed below the lower Donchian boundary at 25432.3. After placing the pending order the stop loss is to be moved every day to the next fractal low, following Parabolic indicator signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop-loss level (25432.3) without reaching the order (26369.8) we recommend cancelling the order: the market sustains internal changes which were not taken into account.

Fundamental Analysis​

HK 50 forecast is bullish despite recent mixed data. Will the HK50 rebound continue? Recent Hong Kong economic data were mixed. Business confidence rose more than expected in third quarter, and unemployment declined in June, however consumer inflation declined when an increase was expected in June, and balance of trade deficit rose in June. Thus, the business confidence indicator in Hong Kong rose to 6 in the third quarter of 2021 compared to 0 in the previous period, a level not seen since the third quarter of 2018. Hong Kong's seasonally adjusted unemployment rate fell to 5.5% in the April to June period of 2021 down from 6% in the previous period. At the same time Hong Kong’s annual inflation rate eased to 0.7% in June from a four-month high of 1.0% in the previous month when an uptick to 1.1% was forecast. And the trade deficit in Hong Kong widened to HKD 40.5 billion in June from HKD 25.5 billion a year earlier when a decline to 14 billion was expected. The Hong Kong stock index retreated steeply in the current month, however the retreat seems to have halted in the last couple of days.