Hang Seng Index (INDEXHANGSENG: HSI) has is gaining momentum once again after recovering from its May 2023 lows. The benchmark index of the Hong Kong stock market dropped to 18,044 in May, its lowest level in last 6 months. The index also seems to have reclaimed a significant level on the chart.
On Thursday, the Hang Seng index surged its fresh monthly highs. The index closed after rising 420 points. The slump in the Chinese stock market is acting as a headwind for Hong Kong markets but the recent pause in rate hikes in the US have been taken very positively by the markets.
Hang Seng Index Makes Fresh Monthly Highs
The Hong Kong stock market has been in an uptrend since the start of June 2023. This follows an 8.30% drop in May 2023. The reason behind the strong comeback in Hang Send Index appears to be fueled by the U.S. Senate passing legislation that would avert a debt default.
The latest data shows that the Hong Kong economy has significantly recovered since the ease of travel restrictions. There has been a significant increase in the inbound tourism in the country. Consequently, the country’s GDP has risen by 2.7% in the first quarter of 2023. On June 14, the FOMC meeting in the US resulted in a pause in rate hikes, this led to a strong surge in the US and Asian equities.
Hang Seng Index Targets 19,300 Level
In my last INDEXHANGSENG: HSI forecast, I predicted a drop to the 18,100 level. My forecast was initially laughed upon by many analysts. However, just a few weeks later, the prediction was perfectly met as the index hit its lowest level in 6 months. After a strong bounce the index now stands at 19,829. In the coming days, it may retest the 20,300 level which is the 0.5 Fob retracement zone.
My Hang Seng Index forecast will remain positive as long as the index keeps trading above the $19,000 level. Another breakdown below this level will be very bearish for the benchmark index. This will put a retest of the 14,666 level on the card on higher timeframe.
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