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Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
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Technical Update - Hang Seng Index, China A50 & JP225
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Hang Seng is continuing its downfall after collapsing last week. Index now back below the falling trendline, below the Cloud and below all Moving Averages.
Further downside seems to be looming.
MACD is also about to turn bearish where RSI on the other hand is still showing positive sentiment and needs to close below 40 threshold to change that.
The HK50 cfd is at the time of writing trading lower suggesting a move to the minor support at around 18,670.
On the weekly chart Hang Seng Index is testing the upper falling trendline and the still positive RSI is about to break below its falling trendline.
If both are closing below their respective trendlines the selling pressure is likely to increase. Hang Seng could be hit by increased selling pressure towards 17K medium-term
A daily close above the upper falling trendline on daily chart and above 100 daily MA would demolish the downtrend scenario and put the Index on neutral. If that occurs it could indicate uptrend to resume. A close above 20,361 would confirm uptrend with potential to 22,500.
FTSE China A50 future reached 1.618 projection of the Double Bottom pattern before retracing back below 13,500 resistance. Now testing support at around 13,064.
The trend is still bullish supported by positive RSI and another push to test the 13,500 resistance could be seen. However, if A50 closes below 13,055 the future could is likely to slide lower to 0.618 retracement at 12,865, possibly dipping down to the 0.786 retracement at 12,662
The rising 200 and 100 daily Moving Averages will offer some support.
Medium-term the A50 had been rejected around 13,500 which could be a signal for the A50 to resume down trend. Weekly RSI is showing negative sentiment underlining the bearish scenario. Strong support around 12,200
To confirm a bullish trend a close above 13,522 is needed.
JP225 cfd is in a corrective phase and could be range bound between 31,770 and 33,400 for next couple of weeks.
If breaking below 31,770 bearish move down to support around 30,600 could be seen. However, the Cloud and 100 daily Moving Average will provide support and there is support at around 31,350 which could cut short a bearish breakout.
If JP225 closes back above the Cloud the resistance at around 33,400 is likely to be taken out with uptrend to resume towards higher highs.
An early warning of that scenario to playout is likely to be if RSI is closing above its falling trendline and above 60 threshold.
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