Chart of the day: Hang Seng Index set for rally
As is so often the case with the Hang Seng Index, volume on the way down was much higher than on the current rally. The three-step bounce from February’s low is nevertheless impressive and has perhaps a little further to go. Because it is neat and weekly moving averages have turned bullish, a retest of April’s high at 21,664 points and Fibonacci retracement resistance at 22,080 points is very likely. This is despite being slightly overbought on Wednesday and bullish momentum currently modest rather than impressive. Were the latter to build, a squeeze to 23,000 points must be allowed for – at which point we would be looking for another intermediate top, though a surge above 23,330 is unlikely because of the cloud top and 50 per cent retracement resistance.
Nicole Elliott is a technical analyst