The Hang Seng is testing a resistance zone between HKD 23,450 and HKD 23,650, where the 50-period simple moving average, SuperTrend and Ichimoku cloud converge. The setup remains consistent with an active bear flag and range consolidation pattern, creating a risk of renewed selling if the index is rejected in this area.
The index was trading at HKD 23,412. Short-term indicators have improved: the MACD has crossed above its signal line, the price is above the 20-period moving average at HKD 23,179, and the RSI has recovered to 57.67 after previously being oversold. A bullish divergence on the MACD and momentum from the recent HKD 22,829 low also point to a recovery attempt.
However, the broader structure remains bearish. The Hang Seng is below its 200-period moving average at HKD 24,416, while the SuperTrend remains negative at HKD 23,482. The index is also below the Ichimoku cloud, which spans approximately HKD 23,231 to HKD 23,617. A break above HKD 23,617 would invalidate the bearish setup, while a move below HKD 22,829 would signal continuation of the downtrend on the five-hour timeframe.
Technical levels identify HKD 22,900 to HKD 23,100 as a potential support zone, near recent lows and the lower Bollinger Band. The HKD 23,100 to HKD 23,450 area is considered a no-trade range because of potentially choppy price action. The main resistance area is HKD 23,450 to HKD 23,650, with a warning that a move around HKD 23,500 could develop into a bull trap.
The next key levels are the 23.6% Fibonacci retracement at HKD 23,590 and the 38.2% retracement at HKD 24,061, measured from HKD 26,055 to HKD 22,829. Average true range is 170.21 points, equivalent to approximately 0.72%, while trading volume is described as flat.
Sources: Investing.com News.