Brief: Hang Seng Forms Bullish Flag, Nikkei 225 Retreats, DAX Index Rises

Summary:

The Hang Seng index has formed a bullish flag pattern today and is bound to break-out while the Nikkei 225 has retreated and the DAX has bounced back

The Hang Seng index is little changed today as investors welcome the latest move by the United States to target Chinese companies listed there. On Wednesday, congress passed a law that will delist Chinese companies that don’t meet America’s accounting standards.

Investors believe that Hong Kong will be a major beneficiary since many Chinese firms like Alibaba have already dual-listed there. CNOOC, the giant Chinese oil company is the worst-performing in the index after the US blacklisted the company. The shares are down by more than 2% today and by more than 18% this week.

Elsewhere, in Japan, the Nikkei 225 index is down by 0.25% with Rakuten, Mitsui Chemical, and Yahoo Japan being the worst-performers. These losses have been partially offset by the gains in Denso, Mitsubishi Chemical, and Konami.

In the United States, futures tied to the Dow Jones and S&P 500 have risen by 0.20% and 0.22%, respectively. While in Europe, DAX index and FTSE 100 futures have also pointed upwards.

There will be two major catalysts today. First, there is a possibility that we will receive more information about Brexit. That’s after Michel Barnier guided to a decision by today. If there is a deal, there is a possibility that the FTSE 100 and GBPUSD will bounce back.

Second, the US nonfarm payroll numbers will also be closely watched. Estimates are that the data will show that the pace of job creation eased a bit in November.

Hang Seng technical outlook

On the four-hour chart, we see that the Hang Seng index has been rising recently. It is now trading at h$26,787, which is above the 50-day and 25-day exponential moving averages. It is also above the Ichimoku cloud, which is further evidence of the strength of the index.

It is also forming a bullish flag pattern that is shown in yellow. Therefore, while the index will end the day in the current range, we cannot rule-out a bullish break-out in the near term.