For the Hang Seng 50, Thursday's trading started off with all the pressure associated with an extremely complicated macro environment facing an Asian index this cycle. July 9 has been the deadline for the latest tariff package from the USA to return to high rates unless they were extended further. Instead of easing tensions, the market is receiving new pressures in the form of another tariff on Chinese goods. This time, President Trump decided to implement a 50% tariff on US copper imports from China, directly hitting the EV and tech companies that form the foundation of the Hang Seng most actively traded stocks. At the same time, Trump stated about the new tariffs on drugs and semiconductors. All this led to an instant drop in stocks BYD was down by 1.47%, Li Auto by 1.41%, Baidu by 1.12%, and Alibaba by 1.03%. It resulted in a decrease of 1.16% in the Hang Seng Tech Index. Moreover, China's macro numbers added more pressure. PPI fell by 3.6% YOY in June. The counterbalance to this is Beijing itself. The Chinese mainland markets ; the CSI 300 and Shanghai Composite are both trading positively due to expectations for new stimulus measures, and the dichotomy between the mainland and Hong Kong's outlooks is one which has characterized this market all year. Hong Kong trades the fear, while the mainland trades the government reaction.
This is a very accurate portrayal of the above mentioned split personality. What the price action here tells us is the index has undergone a controlled and systematic decline from its May high close to 26,900 to its current level at around 23,988, which represents a roughly 11% decline, and is now trying to stabilize itself inside the June-July congestion area. The EMA configuration here is the most important aspect of the chart. The lone EMA is moving upwards from left to right, has been acting as a ceiling for the entire decline. Each rally has found its resistance there without taking control of it, which is precisely what defines a market still in technical decline despite its attempt at stabilizing. This price is moving just above the 50-day EMA at 23,566, which has been the only support so far in terms of structural value.RSI at 49.01 is the least dishonest indicator on the chart. The RSI indicator is slightly below the neutral 50 level, thus indicating that the asset is neither oversold nor overbought. Instead, the current RSI value shows that the asset has experienced an 11 percent decline and now has no particular direction. This is not a problem with the indicator but rather the purpose of the trading strategy based on such data. However, the MACD is where the most valuable signal is on the chart. In this case, the MACD line at −382 and the signal at −507.6 are very low and even negative. Therefore, the medium-term trend of the asset has been bearish since the moment of its fall. However, the histogram of the MACD has become positive and displays the largest green bar visible on the entire chart during the current session. The appearance of the positive histogram within very negative MACD lines is the earliest momentum reversal indicator. This does not mean that the downtrend will end soon. Instead, it means that the pace of falling has slowed down.
Trade recommendation
Direction: Cautiously long
Entry horizon: 23,500 – 23,988
Primary target: 24,355
Secondary target: 24,533
Stop loss: 23,500
Technical scenarios
Beijing-led resurgence: A tangible fiscal package encompassing property relief, rate cuts, or government spending would validate the MACD’s bullish divergence. A sustained RSI rise above 50 and a close above 24,000 would solidify the current congestion zone as support. In this optimistic scenario, the index would target 24,533, with 24,874 marking a full trend recovery.
Protectionist attrition: Ongoing trade restrictions may yield tariff exhaustion, where negative news triggers a diminishing bearish response. This suggests a sideways grind within the 23,500–24,355 corridor, favoring a patient, range-bound strategy over momentum chasing.
Structural anchor failure: A daily close below 23,500, breaking the 50-day EMA, would signal that headwinds have overwhelmed stimulus support. This invalidates the consolidation thesis, exposing the index to a drop toward 23,000 and potentially the April lows near 20,264. The 50-day EMA remains the critical line in the sand.
This is a very accurate portrayal of the above mentioned split personality. What the price action here tells us is the index has undergone a controlled and systematic decline from its May high close to 26,900 to its current level at around 23,988, which represents a roughly 11% decline, and is now trying to stabilize itself inside the June-July congestion area. The EMA configuration here is the most important aspect of the chart. The lone EMA is moving upwards from left to right, has been acting as a ceiling for the entire decline. Each rally has found its resistance there without taking control of it, which is precisely what defines a market still in technical decline despite its attempt at stabilizing. This price is moving just above the 50-day EMA at 23,566, which has been the only support so far in terms of structural value.RSI at 49.01 is the least dishonest indicator on the chart. The RSI indicator is slightly below the neutral 50 level, thus indicating that the asset is neither oversold nor overbought. Instead, the current RSI value shows that the asset has experienced an 11 percent decline and now has no particular direction. This is not a problem with the indicator but rather the purpose of the trading strategy based on such data. However, the MACD is where the most valuable signal is on the chart. In this case, the MACD line at −382 and the signal at −507.6 are very low and even negative. Therefore, the medium-term trend of the asset has been bearish since the moment of its fall. However, the histogram of the MACD has become positive and displays the largest green bar visible on the entire chart during the current session. The appearance of the positive histogram within very negative MACD lines is the earliest momentum reversal indicator. This does not mean that the downtrend will end soon. Instead, it means that the pace of falling has slowed down.
Trade recommendation
Direction: Cautiously long
Entry horizon: 23,500 – 23,988
Primary target: 24,355
Secondary target: 24,533
Stop loss: 23,500
Technical scenarios
Beijing-led resurgence: A tangible fiscal package encompassing property relief, rate cuts, or government spending would validate the MACD’s bullish divergence. A sustained RSI rise above 50 and a close above 24,000 would solidify the current congestion zone as support. In this optimistic scenario, the index would target 24,533, with 24,874 marking a full trend recovery.
Protectionist attrition: Ongoing trade restrictions may yield tariff exhaustion, where negative news triggers a diminishing bearish response. This suggests a sideways grind within the 23,500–24,355 corridor, favoring a patient, range-bound strategy over momentum chasing.
Structural anchor failure: A daily close below 23,500, breaking the 50-day EMA, would signal that headwinds have overwhelmed stimulus support. This invalidates the consolidation thesis, exposing the index to a drop toward 23,000 and potentially the April lows near 20,264. The 50-day EMA remains the critical line in the sand.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Join PrimeXBT via the link below: go.appxbt.link/my6s/vf8j1cp5
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.