Yesterday, the Hong Kong Hang Seng Index (Hong Kong 50 on FXOpen) climbed above 25,745 points, setting a new 2025 high — and marking its highest level since autumn 2021.

August’s bullish sentiment was fuelled by the following drivers:
→ China and the US agreed to continue tariff negotiations in mutual trade through to November.
→ Citi analysts noted that the implementation of additional demand-stimulus measures in China is progressing as planned.
→ According to Reuters, investor interest in China’s technology sector is increasing.

However, today the Hang Seng is trading lower, suggesting that yesterday’s optimism is gradually fading.

Technical Analysis of the Hang Seng Index

Price action continues to form an upward channel (shown in blue), with the index currently trading near its median line — an area where supply and demand tend to balance. This indicates that the Hang Seng may enter a consolidation phase.

That said, several bearish signals suggest the pullback from the 2025 peak in the Hang Seng Index (Hong Kong 50 on FXOpen) could extend:

→ The breakout above the July high was minimal in both progress and duration. The swift reversal after a brief rise is typical of a false bullish breakout, indicating fragile demand.
→ Today, two relatively long bearish candles have closed near their lows — a sign of increasing selling pressure.
→ The MACD histogram remains above zero but is declining — a pattern often seen when price exits overbought territory.

Potential Support Levels in a Correction Scenario:

→ 50% Fibonacci retracement (around 25,295);
→ 25,180 – marked by an explosive price surge and resistance breakout (as indicated by the arrow), signalling strong buyer dominance;
→ The 25,000 psychological level and the lower boundary of the channel — although, in this case, the depth of the decline would call into question whether this is merely a correction or the start of a longer-term downtrend.

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