The Hang Seng index futures (HKEX: HSI) continued their struggles in the Monday morning trading session as investors continued to be concerned by the weaknesses and elevated sense of risk in the banking industry. The futures are currently trading 1.61% lower in the Monday morning trading session as the threat of the credit crunch and stronger US dollar amidst potential contagion spreading to Asian banks’ shares continue to weigh down the index futures.
The bulls could find support in the recent remarks by several lawmakers and regulators on the assurance of the banking industry’s stability and measures in place to protect the industry against any adverse risks. The lack of major negative news on the banking industry during the weekend, combined with the eased fears of the collapse of German’s Deutsche Bank, could help cap the downside.
Technical
The 4H chart shows that the index futures’ bears are looking to push the price action lower after testing and rejecting the breakout level at 19905. The breakthrough below the psychological level at 19639 brought the 50-day moving average and the support level at 19380 into play.
For the bearish sentiment, a substantial move away from the psychological level and the 50-day moving average could indicate the presence of sellers. The bears could look to the support level 19380 as a potential short-term level of interest. The increased selling momentum could push the price action towards the support level at 19273 if the breakout below the initial support level is supported by significant volume.
The bulls could expect a price action pull back towards the psychological level, now acting as a short-term resistance level at 19639. A substantial move above the resistance level at 19639, a level of significance for the bulls, could signal the presence of buying pressure and could push the price action towards the resistance level at 19905, a fraction of the 23rd of March high of 20080.
Summary
With the lack of either negative news related to the banking industry or any significant economic indicators from the Asian or US economy driving the movement of the index futures in the short term, a short-term trading opportunity could exist depending on the price action’s reaction around the psychological level at 19639.
Sources: TradingView, Reuters, CNBC.
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