Hong Kong HSI - Heavily oversold

The China market, which heavily affects the Hong Kong market other than the US market, has been bearish since its peak in October last year and the index was slashed more than half and is expected to continue to decline, given its strong bearish momentum. The Hong Kong market HSI however has shrinked 30% from its peak in October last year. Earlier this March, the HSI made a good short term up trend run of 25% from 21,000 points to the 26,400 points resistance level. The HSI has then started to decline and is currently at 22,590.30 points.

Like the Thailand SET index, the HSI is currently slightly above the the crucial Fibonacci retracement level (61.8%) at 21,000 points and the Stochastic indicator, which is now below 10, is indicating that the HSI is heavily oversold. The HSI may continue to fall to test the support level at 21,000 points, which is the 61.8% Fibonacci retracement level. It may rebound from that level and the HSI may find immediate resistance (from the down trend line) at 24,000 points.

Article by Benny Lee