Technical Update - Free falling Hang Seng and China A50 could drop much lower
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
Hang Seng Index (HSI) is dropping like a stone. There is no strong support before around 11,345. Minor support at 13,465. As previously described Hang Seng seems to be unwinding a long-term Shoulder-Head- Shoulder formation with a potential target of 8,500.
RSI is supporting the strong bearish outlook on both short-, medium- and longer-term.
If buyers come back in lifting the Index above the upper falling trend on RSI HIS could experience a rebound to around 16K where sellers are likely to regain control. But the likelihood of such a scenario to play out seems slim.
FTSE China A50 future (A50) has broken below key strong support at 11,498. No strong support until around 10,160 which is also around the 1.764 projection of the Q2-Q3 correction. A50 is likely to test the lower trendline in the falling channel.
No divergence on RSI weekly supporting the picture of lower levels on A50.
Latest Market Insights
Q4 Outlook 2022: Winter is coming
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)