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Hang Seng Index Rebound: When Will the Correction End? | Key Resistance Levels and Market Sentiment Analysis

The bitcoin mining redditHong Kong stock market witnessed a rebound correction on October 6th, ahead of the reopening of A-shares and Hong Kong Stock Connect. Despite the upward movement, trading volumes remained subdued below 50 billion yuan, reflecting a prevailing cautious and wait-and-see attitude among investors.


While the Hang Seng Index climbed over 270 points, it struggled to breach the crucial resistance level of 17,800 points. This suggests that the short-term trend of seeking a bottom and potential further downside remains intact, with no significant shift in market dynamics.


Market participants continue to express concerns regarding the Federal Reserve's current stance of maintaining elevated interest rates. There are fears that this policy could exacerbate macroeconomic impacts, potentially leading to liquidity challenges reminiscent of earlier incidents involving Silicon Valley Bank and Credit Suisse.


Adding to the financial sector's concerns, reports indicate that Metro Bank, a UK-based institution, may need to secure £600 million due to capital requirement shortfalls. From a technical standpoint, the Hang Seng Index faces its first significant resistance at 17,800 points - a level that must be convincingly overcome to enable further upward momentum. Until this occurs, the market is likely to persist in its current bottom-searching pattern.


While the Hong Kong market appears to be approaching the final stages of its downward correction, potential opportunities for post-decline rebounds may emerge. Historical patterns suggest that confirmation of a market bottom typically requires a substantial increase in trading volumes - a development yet to materialize in the current scenario.


With trading volumes continuing to contract, the Hong Kong market remains in a bottom-finding phase, though likely in the concluding stages of its short-term decline. Investors should note that the final phase of a downward trend often exhibits heightened volatility. Prudent strategy suggests maintaining adequate cash reserves, psychological preparedness, and a watchlist of potential opportunities while awaiting clearer market signals.


For those considering entry points, the 18,000-point level on the Hang Seng Index may present value opportunities, though a phased approach to investment is advisable. Several stocks warrant monitoring, including prominent names across various sectors such as China Resources Beer (00291), Hong Kong Exchanges and Clearing (00388), Tencent (00700), and other major constituents of the Hang Seng Index.


At the close, the Hang Seng Index stood at 17,486 points, marking a 1.58% increase. The H-share index and Hang Seng Tech Index followed similar upward trajectories, gaining 1.46% and 1.55% respectively. Trading volumes on the Main Board exceeded 47.9 billion yuan, with short-selling activity accounting for 16.31% of total turnover - a figure that remains notably elevated. Market breadth showed 1,076 advancing issues against 460 decliners, with 48 stocks gaining over 11% and 49 losing more than 10% during the session.