Hang Seng futures don’t look like they’re about to embark on a face-ripping rally, no matter how cheap valuations are and no matter how much government encouragement is doled out.
By :David Scutt, Market Analyst
- Hong Kong’s Hang Seng surged 4% on Tuesday but there’s been no follow-through buying
- Traders continue to sell rallies even with authorities rolling out measures to boost sentiment and prices
Hang Seng futures don’t look like they’re about to embark on a face-ripping rally, no matter how cheap valuations are and no matter how much government encouragement is doled out. Like so many countertrend rallies in this ugly bear market, the latest bounce looks like it may have already run its course based on the unconvincing price action seen in recent days.
Hang Seng futures suspect above 16200
Even though with the 4% surge registered on Tuesday, it barely registers on the daily chart. And the two subsequent daily candles since don’t provide any confidence the rebound will last, rejected twice at the 50-day moving average, adding to the six consecutive failures above 16200 in early 2024.
Even with renewed excitement towards the outlook for Chinese stocks from some quarters, the price action simply doesn’t back it up. There’s still no shortage of traders willing to sell rallies, even with the risk of being suddenly overrun by a catalyst the market truly gets excited about.
Given how poor the price action has been at 16200, those considering shorts could initiate positions around there targeting a return to 15,475, where futures did plenty of work either side of earlier this year. A stop-loss orders above 16450 would offer protection. Should the trade move in your favour, it could be lowered to entry level, providing a free trade looking for downside.
As a reminder, Hong Kong markets will close for Lunar New Year holidays from Saturday through to Tuesday next week.
– Written by David Scutt
Follow David on Twitter @scutty
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.