It has been a busy morning for the Asian markets, with the Hang Seng Index Futures (HKEX: HSI) 0.57% lower following the Chinese economic data, which shows an economy on a steady recovery. In the first quarter, the Chinese economy expanded in line with expectations of 2.2% from 0.6% achieved in the fourth quarter of 2022. The year-on-year GDP reached 4.5%, above the forecasted 4.0%.

However, the indicators also showed signs that the economy was still faced with some challenges. The decline of 5.8% and 0.4% in real estate and fixed asset investments, respectively, suggests that the business confidence recovery might be slower than initially anticipated. The index’s consumer cyclicals and technology stocks also dragged down the index futures during the morning trading session.

Technical

The 4H chart shows that the bulls have been able to pull back the index futures after the bears pushed the price action below, following the break below the ascending channel. The index futures are trading around a psychological level at 20670 following the bulls’ failure to push their rally past the 20838 resistance level.

The market’s reaction around the psychological level at 20670 could drive the movement of the index futures in the short term. The bulls will need to sustainably push the price above the 20670 if they are to extend their rally. In case of an extended rally, the bulls could look to retest the 20838 resistance level. The break above 20838 would bring the 21240 resistance level into play.

The 50-day moving average (50-EMA) would act as an immediate support should the index futures fail to sustainably move above 20670. A break below the 50-EMA would bring the 20335 and 20080 support levels into play.

Summary

The chart shows that there is bullish sentiment towards the index, and the bulls could be confident in the continuation of their short-term rally. Thus, a short-term trading opportunity could exist as the price action breaks above 20383. In the presence of an extended sell-off, the bulls should avoid the 20080 support level if they look to extend their rally.

Sources: TradingView, CNBC, Reuters.

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