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• Hong Kong’s stocks closed lower for the third consecutive day, with the Hang Seng index falling 0.9% to end at 18,365.70.
• The week saw a significant decline of 2.9% in the Hang Seng, driven by widespread losses in sectors such as property, tech, and financials.
• Property stocks experienced a decline of almost 2%, while tech and financials slipped more than 1% each.
• The Hang Seng remained at a more than one-month low as investors awaited the release of China’s June inflation data, expressing concerns about deflationary risks.
• Ongoing tensions between Beijing and Washington continued to be a focal point for investors, with low expectations surrounding US Treasury Secretary Yellen’s four-day visit to China.

The Hang Seng Index Futures have fallen below the swing lows from the prior week, indicating a potential for absorption behavior and the building of core long positions in the coming weeks. This outcome will depend on the ongoing auction dynamics.

On the daily interval, the market is currently trading below the Year’s developing value area, which suggests a bearish imbalanced structure for the Year. Buyers may find opportunities to enter the market and build core long positions around the prior Year’s lower value extreme.

In the short-term perspective, the market is exhibiting a balanced behavior and may target the lows to establish a balanced price range. Any signs of swing failure around the lows could trigger more buying activity and lead to rotational scenarios. Traders should keep an eye on the prior VWAP close level around 18,800, as it may attract additional sellers into the market.

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