Hang Seng Index Forecast: Extremely Bullish Above H$29,500

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The Hang Seng index is bouncing back as investors wait for a key meeting between US and Chinese delegation next week. The index is also following the performance of US equities, where the Dow Jones closed at a record high.

What happened: China and the US have been in a “cold war” as the two sides have exchanged accusations of key issues. For example, the US accused China of meddling on Hong Kong issues. 

The two sides will now have their first meeting in Joe Biden’s administration to try and iron things up. This meeting will take place in Alaska. They are also set to create a task force to deliberate on the global shortage of computer chips. 

The Hang Seng index is also rising as part of the global rally in equities. Yesterday, the Dow Jones, Nasdaq 100, and S&P 500 indices rallied after the slight increase of US inflation data. Similarly, today, other Asian bourses like the Shanghai Composite and Nikkei 225 indices rose by more than 0.50%.

Hang Seng index changes: Meanwhile, the Hang Seng index is also reacting to news of an impending change by the provider. Last week, the Hang Seng Indexes & Co said that the index will go through the biggest overhaul in more than 50 years. Some of the key changes will be about what constitutes a Hong Kong company. It will also increase its constituent companies to 55.

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Hang Seng index forecast

On the four-hour chart, we see that the Hang Seng has bounced back after dropping to $28,337 last week. It has jumped by more than 2% since Tuesday last week. The index is slightly above the lower line of the ascending channel and slightly below the 25-day EMA. Notably, it has also formed another descending channel that is shown in purple. The current price is at the upper side of this channel. 

Therefore, the outlook for the index is neutral at this stage. Any volume-supported rally above the $29,500 will mean that there are more bulls in the market. This will push the index to rise to the upper side of the original channel at $31,500.

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Hang Seng chart

Hang Seng

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