Bloomberg–Stocks in Hong Kong saw a significant rise, climbing 402 points or 2.2%, to reach 18,164 during Thursday morning’s trading session. This boost occurred as the market opened after Wednesday’s break and was influenced by a positive trend in US futures. This optimism followed comments by Fed Chair Powell suggesting a slowdown in future interest-rate hikes.
As anticipated, the central bank did not change interest rates, maintaining them for the sixth consecutive meeting. The Hang Seng Index approached its highest point in over five months, buoyed by the Hong Kong Monetary Authority’s decision to hold its base rate at 5.75%. This move reflects the city’s monetary policy, following the Fed’s actions closely.
Hong Kong Stocks Surge
Additionally, strong factory output in China during April helped maintain a healthy risk appetite. At the same time, Beijing gears up for the third plenum in July, a key meeting for senior leaders focusing on enhancing modernization across the mainland. The market rally included gains across all sectors, led by significant players such as Tencent Holdings (up 3.5%), Xiaomi Corp. (up 1.7%), Meituan (up 7.5%), Nongfu Spring Ltd. (up 3.1%), and Trip.Com (up 2.2%).
USDHKD Technical Analysis: A Breakout Below 7.817
FxNews–The U.S. Dollar traded at about 7.81 against the Hong Kong Dollar in today’s trading session. The USDHKD bears managed to break below April’s low, the 7.817 resistance. As of this writing, the currency pair is testing the broken support. The breakout is shown in the USDHKD 4-hour chart below.
USDHKD Daily Chart: A Comprehensive Outlook
The daily chart provides a comprehensive outlook on the USDHKD price movement. The 7.817 resistance is in conjunction with the 38.2% Fibonacci level, meaning the bearish bias will likely extend to the 50% Fibonacci level if the price maintains its position below the Ichimoku cloud.
RSI Indicates a Market Slowdown
The technical indicators are in line with the bearish trend. The RSI hovers below 50 but is close to the oversold zone, which can be interpreted as the market could slow down for a short while. The awesome oscillator bars are red and below the signal line. Interestingly, the Standard deviation indicator rose above 0.004, which signals the trend is getting stronger.
Extension to January 30 Low Predicted
From a technical perspective, the primary trend is bearish. With today’s breach below the key resistance of 7.781, the downtrend will likely extend to 7.8122, which coincides with the January 30 low in 2024.
From Bearish to Bullish: The Role of EMA 50
On the flip side, the 7.8245 is pivotal between the bear and the bull market. The bearish scenario should be invalidated if the value of the U.S. Dollar rises above 7.8245 against the Hong Kong Dollar. If this scenario comes into play, it doesn’t mean the trend has changed because the pair will still be under the Ichimoku cloud. Therefore, it can be considered a correction or consolidation phase; this phase would test the EMA 50 in the USDHKD 4-hour chart.
If the price crosses above EMA 50, then we can consider the market direction to be reversed from bearish to bullish.