Hong Kong Hang Seng Index (HSI): may form short rally upwards

It was a very volatile month for the Hong Kong equity market. On the 27th of October, the HSI was three times lower than its peak of 32,000 points just one year ago. The HSI was at 11,015.84. However, a strong rebound followed and the HSI is currently at 13,968.67 points. The Hong Kong market was highly affected by the performance in the US and China markets. The Shanghai Stock Exchange Composite is currently three and a half times lower than its peak last year.

The HSI short term average is currently at 15,950 points. Therefore the HSI is still oversold. A bullish divergence is formed on the daily chart by the RSI indicator and this indicates that the short term down trend momentum is weak. The rebound formed this week may form short rally upwards. However, it may face heavy resistance and the first one is the above short term average. Support level is at 11,000 points.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.