Asian markets are trading higher (Japan is on holiday), following last week’s rally in global markets. Expectations on slower Fed tightening is a factor supporting risk-on sentiment. Meanwhile, China is finally reopening borders, allowing opened sea and land crossings with Hong Kong and ended a requirement for incoming travellers to quarantine. The Chinese Yuan also rises to the highest level since August.
USD/CNH’s chart displayed a text-book head and shoulder top development, with recovery capped by the neckline, followed by accelerated downside movement. With break of the medium term channel support, the fall from 7.3745 should be a down trend of the same scale as the rise from 6.3057. Outlook will now stay bearish as long as 6.9296 support turned resistance holds. Next target should be 161.8% projection of 7.3745 to 7.0191 from 7.2567 at 6.6817.
Hong Kong HSI is now extending the rally from 14597.31, but will soon face an important fibonacci level at 21812.05, 38.2% retracement of 33484.07 (2018 high) to 14597.31 (2022 low). Sustained break there will argue that it’s already reversing the five-year bear market. Nevertheless, rejection from there, followed by break of 19303.73 support will maintain medium term bearishness for down trend resumption at a later stage.
