Technical Analysis HK50 : 2020-03-26

Recommendation:

Strong Buy
Strong SellSellNeutralBuyStrong Buy

Above 23781

Buy Stop

Below 22560.5

Stop Loss

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Senior Analytical Expert
Articles 1463
IndicatorValueSignal
RSI Neutral
MACD Buy
Donchian Channel Buy
MA(200) Sell
Fractals Buy
Parabolic SAR Buy
Fibonacci Buy

Chart Analysis

IFC Markets Tech Analysis

On the 4-hour timeframe HK50: H4 is testing the Fibonacci 32.8 level, rising toward the 200-day moving average MA(200), which is declining itself. We believe the bullish momentum will continue after the price breaches above the upper boundary of Donchian channel at 23781. A level above this can be used as an entry point for placing a pending order to buy. The stop loss can be placed below 22560.5. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (22560.5) without reaching the order (23781), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Fundamental Analysis

Economic data from Hong Kong have been mixed in recent weeks. Will the HK50 rebound continue?

Hong Kong economic data in the last couple of weeks were mixed. Industrial production in Q4 declined 0.5% over same period a year ago following a 0.5% rise in Q3, and unemployment rose to 3.7% in February from 3.4% the prior month. However, consumer price inflation rose to 2.1% over year in February after 1.4% growth in the prior month. The impact of the coronavirus outbreak in China and globally had its negative impact on Hong Kong too. However, many governments launched massive monetary and fiscal aid programs to combat coronavirus impact. Hong Kong government undertook several fiscal measures including tax cuts, rent and financial aid payments to individuals. These measures, among others, included a $1200 cash subsidy to all adult permanent residents, paying one month's rent for people living in public housing, cutting payroll, income, property, and business taxes, low interest government-guaranteed loans for businesses. Global stimulus measures buoyed investors’ confidence, and equity markets globally show recovery signs.

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