Hang Seng Index – Daily timeframe

Current Sentiment: Bearish

Support 1: 29,459                Resistance 1: 31,094

Support 2: 29,129                Resistance 2: 31,799

The Hang Seng Index (HSI) has been trading sideways for the past five months as it oscillates between the 31,799 range high and 29,459 range low. The recent selloff since early June has once again brought price back to the critical range low. Watch this 29,459 – 29,129 range low closely to see if it holds or breaks.

A bearish break and close below the 29,459 – 29,129 range low would signal further downside as the bearish momentum gathers speed. Under this scenario, the HSI could be targeting the 28,224 support area.

However, looking at the Relative Strength Index (RSI) signals a reversal back into the range. RSI measures momentum. A reading above 70 represents overbought condition while a reading below 30 represents oversold condition. With the recent bearish momentum, the RSI is hovering near the oversold condition, currently at 34 suggesting for limited downside and for the 29,459 – 29,129 range low to hold.

For further confirmation, watch out for bullish price action bars near the 29,459 – 29,129 range low for the bullish reversal signal.