HangSeng50: Both profit targets banked updated trade is here!

Five days ago, the Hang Seng had an unfriendly technical backdrop in Asia with the US imposing a 50% tariff on copper imports in the country on July 9, Chinese PPI deflation reading of 3.6% year-on-year, and geopolitical tensions from the Strait of Hormuz. But with its positive MACD histogram divergence and the 50-day EMA intact, it turned out to be a good momentum long trade with its 24,355 primary target breached on July 10 and 24,533 secondary target breached thereafter. The story became more interesting on Wednesday with Q2 GDP growing by only 4.3% year-on-year which was below the 4.5% market expectation and the official target floor of Beijing for the first time since late 2022. But the details behind this GDP miss reveal that China's economy is unbalanced rather than broken as the retail sales grew by 1.0% (vs. 0.1% drop expected) in June, industrial production recorded 5.3% (vs. 4.6% estimate) and exports grew at the fastest pace since October 2021. On the other hand, the domestic demand is weak with fixed asset investment falling 5.7% year-on-year (vs. 4.9% drop expected) and property investment falling 18% in the first six months.

Indeed, the daily chart shows a real structural change. Both the EMA 9 and EMA 20 that provided resistance throughout the month of June have been retaken and are curling higher, indicating institutional accumulation. An additional bullish MA Cross at 23,952 and 23,738 corroborates this change in direction. The RSI at 60.48 offers a very interesting indicator as it has convincingly crossed above its signal line of 39.60, indicating strong buying pressure while remaining below overbought conditions and hence showing there is some scope for continuation of the trend. This is confirmed by a bullish MACD crossover, where the MACD line at 219.25 is comfortably above the signal line and the histogram is showing its biggest readings since April. But, of course, the miss on Q2 GDP growth (brings a fundamental driver into play as the story switches from sentiment to policy dependence. Although the technical indicators are providing the runway for an advance, hitting the extended target of 25,113 would depend on a policy announcement in late July in the Politburo meeting.

Updated trade plan

Direction: Long both targets banked, manage the remainder with discipline

Status: Primary target (24,355) hit 10 July. Secondary target (24,533) hit 15 July.


New operative target: 24,874

Extended target: 25,113

Trailing stop: 24,000

Key date to watch: Late July Politburo meeting

Technical scenarios

Bull case: Stimulus mandate unlocked with Q2 growth below the 4.5% floor, the late-July Politburo meeting is critical. If Beijing implements rate cuts or fiscal expansion, the confirmed MACD crossover supports a move toward the 25,113 EMA 200 target. The GDP miss effectively acts as a catalyst for aggressive policy support.

Base case: Consolidation and positioning the index will likely oscillate between support at 24,355 and the 24,874 peak as institutions await the Politburo signal. Expect RSI cooling and MACD histogram compression. With the 24,000 trailing stop secure, this remains the most probable near-term outcome.

Bear case: Structural headwinds trigger reversal If the 4.3% growth and 18% property slump signal ineffective stimulus, risk appetite will likely fade. A daily close below the 24,000 trailing stop invalidates the current recovery, refocusing on June lows. Until then, the EMA and RSI structural shift remains the dominant framework.