• HK50 index rebound runs into trouble at 50-day SMA

• Still plenty of positive momentum left

• But risk that bull’s latest attempt falters

The HK50 stock index (cash) has turned lower after the latest rebound met resistance at the 50-day simple moving average (SMA) near 16,274. The index jumped by more than 5.5% in the first two trading days of the week before coming under selling pressure.

The momentum indicators remain broadly bullish, with the stochastics and MACD still climbing and positively aligned. But the RSI has dipped lower today slightly above the 50 level, pointing to a possible deterioration in the upside momentum.

Should the index overcome the 50-day SMA and resume its ascent, there’s likely to be further resistance at the lower entry point of the Ichimoku cloud around 16,815. The cloud top could also block advances at 17,168 before the 61.8% Fibonacci retracement of the October 2022-January 2023 uptrend at 17,688 comes into view.

To the downside, a potentially crucial support zone is forming around 15,775 where the 20-day SMA is converging with both the Tenkan-sen and Kijun-sen lines. Breaching this zone would shift the short-term bias back to bearish, with attention next turning to the recent lower lows at 15,250 and 14,785.

In brief, hopes for further gains in the near term have not completely evaporated, but for any rebound to be sustainable, the index would not only have to make a convincing break above the 50-day SMA, but also successfully pierce above the cloud. Failure to conquer the 50-day SMA would keep the index within the long-term downward trajectory.