Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Technical Analyst, Saxo Bank
Summary: Strong bounce in Hang Seng/HK50 forming bottom and reversal pattern
China A50 trading wide range
Nikkei/JP225 in corrective phase that could turn into bearish trend
Hang Seng Index/HK50 bounced strongly Friday morning from August lows at 17,573 forming a Bullish Engulfing bottom and reversal candle in the process. The move engulfs the previous two trading days.
With RSI divergence a reversal is likely, however short-lived it might be. A reversal that could take Hang Seng to its resistance at around 18,900.
If closing above 18,900 short-term uptrend has been confirmed.
For Hang Seng to resume downtrend a close below 17,573 that would lead to a sell-off down to 17K
China A50 future seems short-term directionless but is in fact trading in a larger range between 12,265 and 13,500. Very short-term the upper band is at around 13,064.
A bullish break is likely to push the A50 future to the 13,500 resistance
A close below 12,265 could fuel a sell-off down to around 11,150 with support at around 11,830