In this vedio, we explore the impact of the Federal Reserve's recent interest rate cut on the Hang Seng Index, which has led to a notable rally. We delve into the details of this market movement and attempt to forecast the upcoming trends by examining the Mini Hang Seng futures market. Stay informed about the potential shifts in the financial landscape and how they might affect your investments.
Speaker: Daniel Ang (Sophisticated Trader with 30 yrs exp)
Subtitle
Today is Monday, September 23,2024. And most markets in Asia rose on the back of last week's Federal Reserve decision to cut interest rates from 5.5% to5%. Obviously, this has resulted in a rally in the Hang Seng index. We have the Hang Seng index rallying to the highest that we have ever seen since June 20. And we're going to be exploring, exploring the mini Hang Seng index futures trading out of the Hong Kong Futures Exchange.
Now, this is the daily timeframe for the cash Hang Seng index, which is not the futures, it is the cash index. You can see that the Hang Seng index has been having a good run so far this year. Starting on January 22 at the beginning of the year, we can see the low traded for the Hang Seng cash index was at14.794.16. And it has rose up in a three way structure to the May 20 high of 19,706.12. After which it has come under a profit, taking that last all the way to August 5, which is last month in which all equity markets around the world experienced a bit of a mini crash and the low traded was 16,441.44. And now the market is on the rise again. And especially what we saw last week after the Federal Reserve cut interest rate, we saw resurgence in equity markets around the world. And this is no difference for the Hang Seng index. The high traded so far is this morning at 18,426.92. Now this is referencing the cash markets.
Now we want to take a look at the futures contract. And in this case, I'll be looking at the Mini Hang Seng. And what we have here in the chart in front of you is the mini Hang Seng index. The dominant trend is still basically down. The high traded is at 20,421 in the current most active contract, which is a September contract. And we can see that the market has actually rosen to 19,771 from a low of 14,795, which is at the beginning of the year. Like I said, this actually mirrors what we saw in the cash index. And the high traded so far this morning in the futures contract was 18,449. Now, this is telling us that the market has momentum behind.
And how do we know? We can take a look at this indicator called the ADX, which is a momentum indicator, and you can see it at the bottom of the screen here. You can see that the index is currently rising, which suggests that the market has momentum behind this rally here. So I'm very hopeful that the near term target at about 18,671 to 19,078 should be able to be achieved sometime this week itself.
And in a larger scheme of things, the larger degree rebound I from 14,795 in a three way structure may be targeting something as high as 21,412 to 22,586 in the futures contract relative to the most actively traded contract. As we know, September is going to be coming to an end soon, so the next contract that we will be watching will be the December contract.
So by and large, the momentum underlying the current surge in the Hang Seng index does looks pretty good and I think at least for the near term, for this week, a rise to 18,761 to 19,078 is very achievable.
Watch the video to learn more.
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