China A50 Index and Hang Seng Index Regain Upward Momentum

Both the China A50 Index and Hang Seng Index rose around 7% from May's low. In addition, both indexes broke above the declining trend line drawn from the January top.......

Uptrend 1

Both the China A50 Index and Hang Seng Index rose around 7% from May's low. In addition, both indexes broke above the declining trend line drawn from the January top. It would suggest that the both indexes have made a significant bottom in March.

China's Caixin Services PMI rose to 55.0 in May (47.3 expected) from 44.4 in April. Key findings included:" Business activity and new work rise at quickest rates since late 2010 (...) Pandemic continues to weigh heavily on export orders (...) Employment falls slightly as firms look to raise efficiency."

In the below chart, the Caixin Services PMI rose the fourth month after reaching the bottom since March. It suggests that the non-manufacturing activities regain the upward momentum after the outbreak of COVID-19.

Sources: Trading Economic

Next week, investors should focus on the imports (-9.7% expected) and exports (-7.0% expected) data.

In addition, different countries in the world have started to launch stimulus packages, when the situation of COVID-19 eased. Moreover, the interest rate in those developed countries are at relatively low levels. When the investors' risk appetite increased, investors would increase the investment of higher risk assets, such as the equities index and stocks.

Let's take a look at the daily chart of the China A50 Index.

Source: GAIN Capital, TradingView

From a technical point of view, China A50 Index has recorded a series of higher tops and higher bottoms since March. Currently, the prices are trading above both rising 20-day and 50-day moving averages.

The RSI also reached a new high around the 60s, suggesting the upside momentum for the prices.

The readers could set the support level at 13110 (the low of May 29), while resistance levels would be located at 14250 (the high of February) and 14690 (the high of January).

After that, we will check out the daily chart of Hang Seng Index

Source: GAIN Capital, TradingView

The Hang Seng Index posted a rebound after forming a reversal bar at 22600 (Fibonacci 61.8% retracement level between the bottom of March and the high of April). Currently, the index prices returned the level above the level of 20-day and 50-day moving averages. Besides, the 50-day moving average is reversing up, indicating that the trend in a longer period is turning to positive.

The RSI has marked a new high and is still heading upward , suggesting the upward momentum for the prices.

Bullish readers could set the support level at 23100 (the gap created on May 29), while the resistance levels would be 25000 (a gap occurred on March 12) and 26000 (a gap occurred on March 9).

More from Indices


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.