Today is a busy day, full of macroeconomic data from Europe, as well as news from both the US and China regarding yesterday’s Federal Reserve meeting and Evergrande’s ongoing situation.
During today’s session, we have seen preliminary manufacturing and services PMI data for France, Germany, the UK and the Eurozone as a whole. Overall, these data were not only worse than last month, but also worse than expected by the market consensus for the third consecutive month in both Germany and the Eurozone – confirming that the economy continues to slow down due to the crisis caused by commodity delivery problems, microchips and the delta variant of the coronavirus.
Jerome Powell announced yesterday that tapering would begin at the next meeting in November and could end mid-2022, while interest rates remain stable and are not expected to change until 2023. However, some members of the Federal Reserve believe that it would be better to raise interest rates in the second half of 2022.
It seems that the uncertainty generated by the technical bankruptcy of the Chinese giant Evergrande is starting to calm down, after the company indicated that it would pay its domestic coupons due on 23 September, easing the tension surrounding the company and causing a strong rebound in both the company and the Chinese stock markets in general.
If we look at the daily chart, we can see that, during the last two sessions, the Hang Seng index has experienced a strong rebound after hitting yearly lows. This has led it to face the 38.2% Fibonacci retracement level in the area coinciding with its previous support level in red of the sideways movement it has been following during the last two months.
It is important to follow the evolution of the price in the coming sessions. Currently, it is at an important resistance level and a bounce to the downside could confirm the breakout of the sideways channel and trigger a strong bullish impulse with a pullback whose price target would be the width of the sideways channel defined by the green and red stripes.
On the other hand, if the price manages to break higher and hold these levels, the price could form a new upward impulse in search of its white 18-session moving average, around the 50% Fibonacci level. A break of this level would open the door for the price to seek the upper band of the channel.
Evolution of the last five years:
- 2020: -3.40%
- 2019: 9.07%
- 2018: -13.61%
- 2017: 35.99%
- 2016: 0.39%
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