Hang Seng (INDEXHANGSENG: HSI) index has the week in the red. The benchmark index of Hong Kong equities lost 252 points on Monday and stood at 17,930 points at press time. HSI is facing strong headwinds due to the deteriorating Chinese economy.
Technical analysis points towards more downside for the index as it has fallen below a very critical level on its chart. Last week’s pullback in the US equities also didn’t help. Hang Seng currently sits only 330 points above its yearly low. After a strong surge in January 2023, the index has been in a tailspin since then.
HSI Index Turns Red As Property Sector Cracks
According to the latest reports, the arrests Chinese authorities have made some arrests at Evergrande’s wealth management arm. The news has impacted Hong Kong equities, which are already facing multiple headwinds.
The global stock markets are awaiting the decision of this week’s FOMC meeting in the US. The CME Fed Watch tool shows a 97% chance of the rates remaining the same. However, most analysts still expect another rate hike before the end of this year. Hang Seng Index will likely remain volatile this week as multiple Asian central banks are set to meet.
Hang Seng Index Forecast
As pointed out in my previous INDEXHANGSENG: HSI analysis, the index has failed to reclaim the 18,265 support level. This region was a major demand zone on the daily timeframe. The recent breakdown has flipped the Hang Seng index forecast bearish for short-term traders.
In case of reclaim of the $18,265 level, bulls may target 18,900. However, a higher likelihood seems to be of a retest of the 16,850 level, which is the next major resistance. The Chinese economic data and the strength of the US dollar will remain the major catalysts for the index in the coming weeks.
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