On April 3rd, there was a double-digit sell-off on the Hang Seng China Enterprises Index, triggered by the imposition of mutual tariffs by the United States and a significant increase in U.S. tariffs on China. The Hang Seng CE Index (CHN.cash) broke through a trend line on May 26th, located at the key resistance level of 8510 (the last support level and a resistance level that halted the index's growth in November, keeping the price consolidated between 6900 and 7750). The break above the 50-day exponential moving average (EMA 50) in mid-April indicates the index’s upward potential. Additionally, the bounce after testing a key support level and maintaining above the EMA 50 may suggest growing strength in the Hang Seng.
Recent reports on U.S. pressure for negotiations with Chinese leader Xi Jinping caused a positive reaction today in the Chinese market, signaling a potential resolution to the dispute between the two powers. If the price moves strongly in the coming days, the geometry of the previous rally leaves room for the index to enter the range of 9209–9403. Price movement within this area is highly dependent on the progress and outcome of trade negotiations between the U.S. and China. A lack of political clarity upon reaching the resistance level at 9403 could trigger a strong selling reaction. However, a breakout above this key level, combined with positive investor sentiment, may extend the rally beyond 9400.
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