Looking at the current technical picture on our 4-hour chart, we can see that the Hang Seng index is forming lower highs, however it is struggling to move below the 24170 hurdle, for now. That hurdle acted as a good support on August 7th and September 9th, or in other words, it marks the lowest point of August and the current lowest point of September. Although the price is currently trading below a short-term tentative downside resistance line drawn from the high of August 31st, which at the moment indicates the trajectory of the current short-term trend, we would still prefer to see a drop below that 24170 hurdle, before examining lower levels. Until then, we will take a cautiously bearish approach.
If the price ends up falling below that 24170 zone, that might invite more sellers into the game, as such a move would confirm a forthcoming lower low. Hang Seng could then drift to the 23637 obstacle, which is the low of June 15th. The index could get halted there, or even rebound somewhat. That said, if the price remains below the 24170 barrier, this could result in another slide. If this time it is able to overcome the 23637 obstacle, that could clear the path to the 23455 level, marked by the lowest point of June.
Although the RSI is currently flat, it remains below 50. The MACD is more reassuring in terms of showing an increasing downside price momentum, as it continues to point lower, while running below zero and its trigger line. The two oscillators seem to be in support of the above-discussed scenario.
Alternatively, if the price is able to break the aforementioned downside line and then rise above the 24920 barrier, marked by the high of September 15th, that may open the door for larger advances. Such a move will place Hang Seng above the 200 EMA and confirm a forthcoming higher, potentially spooking the remaining bears from the field. The index may travel to the 25284 hurdle, or the 25365 zone, marked by the high of September 1st and an intraday swing low of August 28th respectively. That said, if the buying doesn’t stop there, a further push north could bring the price to the highest point of August, at 25895.
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