Throughout the whole of August, the Hang Seng index (HSI) has been moving sideways, but with a slight tilt to the upside, and we can mark this by drawing a short-term tentative upwards-moving trendline from August 7th. However, the index seems to be struggling to overcome the area between the 25590 and 25634 levels, marked by the highs of August 17th and 26th respectively. For now, we will take a cautiously-bullish approach and wait for a break above the 25634 barrier, in order to get comfortable with higher areas.
If Hang Seng is eventually able to rise above the 25634 barrier, that may attract even more buyers into the game, as such a move would confirm a forthcoming higher high. The index could then crawl to the 25783 obstacle, a break of which might clear the path to the 26101 hurdle, marked by the high of July 13th. The price might stall there for a bit, or even correct slightly lower, but if the bulls manage to keep it somewhere above the 25783 zone, another uprise could be possible. If so, Hang Seng might climb back to the 26101 area, a break of which may send it to the 26372 level, marked by the high of July 9th.
The RSI, on our 4-hour chart, is currently slightly below 50, but remains flat, which suggests that the price is showing negative momentum. The MACD, on the other hand, despite pointing slightly lower and running below its trigger line, remains above zero. Although this suggests a lack of upside price momentum, as long as it stays above zero, the index could remain of interest for the buyers. With no clear indication of direction, we stick to the idea of waiting for a break above the 25634 hurdle, before examining higher areas.
Alternatively, a break of the aforementioned upside support line and a price-drop below the 24864 territory, marked by the low of August 21st, could spook the remaining bulls from the field and allow more bears to join in. The index might then drop to the 24573 obstacle, a break of which may lead to a test of the lowest point of August, at 24170.
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