Analysing the Hang Seng (Hong Kong 50 at FXOpen) chart on January 30th, we noted the price near a key support level marked by the lower boundary (in orange) of a long-standing channel dating back to 1995.
Goldman Sachs representatives highlighted hedge funds actively acquiring Chinese stocks, with the period from January 23rd to 25th seeing the largest capital inflow in five years, according to Reuters.
By early May, recent price action confirms hedge fund purchases were justified, as the Hang Seng 50 (Hong Kong 50 at FXOpen) index surged over 13% in the past fortnight.
This was partly due to:
- Economic stimulus from Beijing.
- The Hong Kong Monetary Authority (HKMA) maintaining the base rate at 5.75%. The South China Morning Post noted HKMA’s policies align with the Federal Reserve’s since 1983, reflecting the local currency’s peg to the US dollar.
Technical analysis of the Hang Seng (Hong Kong 50 at FXOpen) weekly chart shows bullish signs:
The HSI price (Hong Kong 50 at FXOpen) remains within the long-term orange channel. After January 2024 fluctuations around 16,000 points, the price stabilised above this level.
In mid-April, bearish attempts to breach 16,000 points failed.
The last two closed candles were bullish, with wide bodies closing near their highs, indicating dominant demand.
If bulls maintain control, the HSI price (Hong Kong 50 at FXOpen) could break above the upper boundary of the descending red channel, signalling a significant rally.
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