Hang Seng Index Technical Analysis – China is going all in

Fundamental
Overview

The Chinese Politburo announced
that it will adopt a “moderately loose” strategy for monetary policy for 2025, which
marked the first major shift in stance since 2011.

Moreover, the language around fiscal policy was stepped up to “more
proactive” from just “proactive” in another sign that Chinese officials intend
to ease policies more forcefully to prop up the economy.

The market will now expect big rate cuts and asset buying, which should
support the stock market going forward.

Hang Seng
Index Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the Hang Seng broke above a downward trendline
that was defining the bearish momentum on this timeframe. The buyers piled in
on the news and will target a new cycle high. The sellers, on the other hand,
will want to see the momentum failing and the price dropping back below the
19731 level to target the 18203 level next.

Hang Seng Index Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have now a minor upward trendline defining the bullish momentum on
this timeframe. If we were to get a pullback into it, we can expect the buyers
to lean on the trendline to position for a rally into the 21342 level next. The
sellers, on the other hand, will look for a break lower to start positioning
for a drop into the 18203 level.

Hang Seng Index Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the price rallied above the top of the average daily range for today already as the buyers
piled in aggressively on the news. In fact, when there are such big surprises, the price can run a lot. The best moment to enter the market was of
course on the news as the bullish momentum might now increase and not provide
any technical entry. We might see new highs during the Asian session.

This article was written by Giuseppe Dellamotta at www.forexlive.com.