Hang Seng Index at Risk of Multi-Week Decline Within Major Bullish Trend

• The major uptrend phase of the Hang Seng Index from January 2024 remains intact.
• Daily RSI momentum indicator suggested an overstretched rally where its medium-term uptrend may have reached a terminal point on 19 March.
• A multi-week corrective decline may take shape now, watch the 24,980 key medium-term resistance on the Hang Seng Index.

This is a follow-up analysis of our prior report, “” dated 11 February 2025.

Since our last publication, the price actions of the have staged an up move towards the medium-term resistance zone of 24,400/24,980 and rallied by 15% to print an intraday high of 24,874 on 19 March.

Overall, the Hong Kong stock market is one of the stellar positive outperformers, together with European bourses, in the first quarter of 2025, riding on the coattails of China’s Artificial Intelligence (AI) “lower operational costs” theme play triggered by DeepSeek as well as the commitment of Chinese top policy makers to implement more expansionary fiscal policies to boost domestic consumption to reverse the ongoing deflationary spiral in the Chinese economy after the conclusion of the recent National People’s Congress meeting in early March.

K-Shaped Performance Between Hang Seng Index and US Stock Indices May Persist

Fig 1: 3-month rolling performances of Hong Kong & US major CFD stock indices as of 27 Mar 2025 (Source: TradingView)

The Hang Seng Index has recorded a positive Q1-to-date gain of 18% as of 26 March. In contrast, the benchmark US stock indices wobbled with a loss of 2.8% for the and a larger magnitude of -5.2% inflicted on the mega-cap technology-centric over a similar period due to rising stagflation risks in the US economy from trade tariffs.

A similar K-shaped performance can be seen as well between OANDA’s contract-for-difference (CFD) stock indices on the Hang Seng Index and the four major US benchmark stock indices based on a three-month rolling performance basis as of Thursday, 27 March at this time of the writing (see Fig 1).

Overstretched Rally

Fig 2: Hang Seng Index major & medium-term trends as of 27 Mar 2025 (Source: TradingView)

In the lens of the technical analysis, price actions of highly liquid tradable instruments do not move vertically but rather oscillate within a broader trend phase.

The major uptrend phase of the Hang Seng Index since 22 January 2024 remains intact as it continues to trade above the rising key 200-day moving average.

The most recent three-month medium-term uptrend phase from 13 January low of 18,671 to 19 March high of 24,874 has reached an overstretched condition as depicted by the recent bearish divergence signal being flashed out by its daily RSI momentum indicator at its overbought region on 20 March.

In addition, its price actions have started to trade below its 20-day moving average since 25 March, which increases the odds that the three-month uptrend may have reached its terminal point on 19 March upon the bearish reaction off the upper boundary of the major ascending channel.

Watch the 24,980 key medium-term pivotal resistance on the Hang Seng Index, where it is likely to shape a potential multi-week corrective decline at this juncture to expose the medium-term supports at 22,440 and 21,350 before another impulsive up move sequence materialises (see Fig 2).

However, a clearance above 24,980 invalidates the bearish scenario for the bulls to take centre stage for the next medium-term resistances to come in at 26,350 and 27,040.

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