A Chinese regulatory clampdown across multiple sectors, ongoing trade disputes, energy shortages and fears of contagion into the financial system from a heavily indebted Evergrande (HK:3333), have been among the factors weighing on Asian markets, the Hang Seng Index and China A50, as of late. However from a charting standpoint we are starting to see some signs of a bullish trend reversal, at least in the very near term.
The Hang Seng Index (Hong Kong 50)
Source: IG Charts
The Hang Seng Index is currently breaking above the downward trend line which has been in place since July this year. The move higher follows a short term consolidation between levels 23925 and 24845.
The upside breakout suggests a short term trend reversal from down to up. 26500 becomes the initial upside target from the move. A close below the 24615 might suggest the short term reversal to have failed.
China A50
Source: IG Charts
The China A50 index also looks to be breaking above the long term downward trend line on the chart above after a more prolonged consolidation between levels 14560 (support) and 15680 (resistance).
The upside breakout now sees 16795 as the next upside resistance target from the move. A close below the midpoint of the range at 15120 would instead suggest the failure of the short term bullish trend reversal.