Hang Seng Index Marks Worst Monthly Performance of 2022

The Hang Seng index plunged heavily on Wednesday and fell 3.41% as the index reacted negatively to the recent US data that appear to provide some leeway for the Federal Reserve to continue hiking interest rates. The Hang Seng index resumed the selloff following two days of weak gains. 

Hawkish comments by St. Louis President James Bullard at an event in London sent US and Asian indices spiralling downwards after the notable hawk and member of the Fed’s governing board ramped up rhetoric on the need for the Fed to continue an aggressive pathway to inflation control. 

The hefty slump in the Hang Seng index following two days of bullish pinbar candles underlies the fundamental weakness in global stock markets as recessionary risks from further rate hikes by central banks dominate the market sentiment. 

The Hang Seng index has had a poor run of form since hitting the 22,449 high in June, shedding nearly a quarter of its value at present. The Hang Seng index looks set to mark the third straight month of losses, with the current downside of 13.55% set to make September the worst-performing month of 2022. 

Hang Seng Index Forecast

The intraday decline confirms the breakdown of the 17776 support (17 October 2011 low) by fulfilling the price filter. This move clears the pathway toward 16953, a low previously seen on 26 September 2011. Below this level, further price deterioration brings in 16194 (10 October 2011) and the 11 May 2009 low at 15855. 15500 is psychological support which becomes a new harvest point for the bears if the bulls fail to defend the 15855 pivot. 

Any hopes for recovery have to follow a pathway that starts with a breach of 17776, targeting 18066 initially (26 September high) before the 18290 price mark becomes an additional upside target. Attainment of the 18698 resistance closes the downside gap of 22 September 2022. However, the bulls must uncap the 18698 price mark for the 19083 resistance target to come into focus.  

Hang Seng: Daily Chart