Elevated concerns over the corporate earnings in Asia sent the stocks lower, helping the Hang Seng Index Futures (HKEX: HSI) close the Monday trading session in the red. The index futures dropped by 0.50% to add to the Friday trading session’s 1.79% decline as the investor sentiment that the corporate earnings are trailing the broader economic recovery in the region.

However, the easing unemployment rate could help the index futures limit the extent of the losses in the short term. Hong Kong’s unemployment rate improved for the eleventh consecutive quarter after easing to 3.1% in the January to March period from 3.3% in the three-month period from December to February.

Technical

The 4H chart shows that the index futures recently broke out of the narrow trading zone as bears took control, but the appearance of the two green candles could suggest that the bulls might be down, but they are certainly not out.

So, should the bears want to continue their charge in the short term, they would need to overcome the 61.80% Fibonacci retracement level drawn from the 20^th March 2023 low of 18857 to the 17^th April 2023 high of 20896. A sustained break below the golden ratio would bring the 19548 support level into play. A move below 19548 could suggest the presence of sellers and would boost the bears’ charge towards the target level at 19282.

However, should the bulls regain short-term dominance, the 20080 price level would act as the immediate resistance level to the bulls’ run. A sustained move above the 20080 price level would bring the 20346 resistance level and the 23.60% Fibonacci retracement level into play.

Summary

With market chatter primarily driving the movement of the index futures in the short term, the continued chatter from the US ahead of the FOMC meeting next week and the corporate earnings releases would continue to drive the index. Should the underlying bearish sentiment prevail, a short-term trading opportunity could exist as the price action moves below the golden ratio. However, should the bulls regain short-term dominance, a short-term trading opportunity could exist as the price action moves above the 20080 price level.

Sources: TradingView, Reuters, CNBC.

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