Market News & Analysis


Top Story

Tencent & AIA may torpedo Hang Seng Index

Medium-term technical outlook on Hong Kong 50/Hang Seng Index


click to enlarge charts

Key Levels (1 to 3 weeks)

Intermediate resistance: 26700

Pivot (key resistance): 27000

Supports: 26140, 25500 & 24870/500

Next resistance: 28200

Directional Bias (1 to 3 weeks)

Bearish bias below 27000 pivotal resistance for potential push down towards 26140 before targeting the next support at 25500 within a major range consolidation configuration in place since 26 Oct 2018 low seen in the Hong Kong 50 Index (proxy for Hang Seng Index futures).

However, a clearance with a daily close above 27000 invalidates the bearish scenario for a further corrective rebound towards the upper limit of the major range configuration; setting sight on 28200 in the first step (former swing low areas of 26 Jun/09 July 2019 & the 61.8% Fibonacci retracement of the previous decline from 03 May high to 15 Aug 2019 low).

Key elements

  • The recent rebound from 10 Oct 2019 low of 25475 has stalled at a medium-term descending trendline from 03 May 2019 high, acting as a resistance at 27000 that confluences with the 76.4% Fibonacci retracement of the recent slide from 13 Sep high to 10 Oct 2019 low and the former ascending support from 15 Aug 2019 low.
  • The 4-hour Stochastic oscillator has traced out a bearish divergence signal at its overbought region which indicates that the upside momentum of the recent rebound from 10 Oct low to 18 Oct 2019 high has started to wane. Thus, the risk of a short to medium-term downside reversal increases at this juncture.
  • Negative elements have been sighted in the heavy weightage component stocks of the Hang Seng Index; Tencent (Technology) and AIA (Financials) with a combined weightage of 19.48% that may put a downside pressure in the Hang Seng Index (see below charts for more details).
click to enlarge chart
  • Highlighted in our previous report (click here for a recap); 351.00 key pivotal support and 316.80 remains the significant downside trigger level (a range support in place since 21 Dec 2018).
  • A break below 316.80 opens up scope for a potential multi-week decline towards the 30 Oct 2018 swing low area at 292.70.

click to enlarge chart

  • Since 88.50 all-time high printed on 19 Jul 2019, AIA has started to trace out a “Head & Shoulders” bearish configuration where it tends to form at the end of uptrend that indicates a potential topping process.
  • The neckline support of the “Head & Shoulders” rests at 72.10 where a daily close below it triggers a multi-week decline towards the next significant medium-term support at 64.60 (major ascending support from Mar 2016 low & 1.00 Fibonacci expansion of the decline from 19 Jul to 14 Aug 2019 low projected from 12 Sep 2019 high).

Charts are from City Index Advantage TraderPro & eSignal 


Disclaimer

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 cityindex.com.sg 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.