CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Short Term Outlook of Hang Seng Index Gap Up and Break the Trend line

Article By: ,  Financial Analyst
May 11, 2020 1:33 AM

Short Term Outlook of Hang Seng Index: Gap Up and Break the Trend line.

Hong Kong's Hang Seng Index jumped around 2% following the rise of the U.S. market last Friday. In Asia Pacific, Japan's Nikkei Index was up around 1.4% and Australia's ASX200 Index climbed around 1.7%.

China's central bank pledged "more powerful" policies to deal with unprecedented economic challenges caused by the Covid-19 pandemic. As Hong Kong's market is highly correlated to China, it would be positive news to the Hong Kong market also.

Investors should focus on China's April CPI (3.7% expect), PPI (-2.5% expect), industrial production (+1.5% expect) and retail sales (-6.0% expect) this week.

On a Daily chart, the index posts "Gap up" and breaks above the declining trend line drawn from January. It would be a very strong signal to call for the upward acceleration. Besides, the 20-day moving average is very close to the 50-day one. It is highly possible to indicate a bullish cross signal, which should enhance the positive outlook. In addition, the RSI is still heading upward, suggesting the upward momentum for the index prices.


Hence, as long as the previous low at 23600 is not broken, the index prices could consider a further upside to the resistance levels at 25000 (the gap occurred on March 12) and 26000 (the gap created on March 9).

Alternatively, a break below 23600 would erase the bullish outlook and test the support level at 22700.


Source: GAIN Capital, TradingView

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024