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Hang Seng Index CBBC Market Watch | Re-stabilizing above 25,000 points; next focus is whether 25,267 can be breached

Hang Seng Index $Hang Seng Index (800000.HK)$ Closed on July 23 at 25,210.81 points, up 318.15 points or 1.28%, with the day's trading range between 24,876.83 and 25,267.39 points。

The rebound from the low of 22,518 points continues. After reclaiming the 25,000 mark, market sentiment has clearly improved in the short term. However, the index closed near its session high, and the faster RSI has risen close to 70. At this stage, deploying CBBCs requires not only directional views but also careful consideration of resistance levels and knock-out distances.

We will simplify the current market situation into two scenarios:

– Above 25,267 points, watch whether the rebound can extend further;

– Below 25,000 points, watch whether the level of 24,877 can continue to hold.

Technical levels: 25,267 is the first resistance; 25,674 is the next resistance level.

From the price chart, short-term traders should monitor the following levels for the Hang Seng Index:

The Hang Seng Index closed less than 60 points below 25,267. If the index breaks above this level and stabilizes, the next notable technical target would be around 25,674.

Conversely, if the Hang Seng Index fails to break through and falls back below 25,000 again, attention should turn to the 24,877 level. Should this level be breached, the short-term rebound momentum would begin to weaken.

The RSI readings on the chart are approximately 68.6, 62.6, and 54.9, indicating that short-term momentum remains relatively strong, though the fastest-moving indicator is already approaching overbought territory. Therefore, the key focus when buying bull certificates now is not to push the call price as close as possible, but rather to first confirm whether the breakout shows follow-through.

Bull certificate distribution: representative products with the same call price at 24,000

Two representative Hang Seng Index bull certificates listed in the product overview both have a call price of 24,000. Based on the Hang Seng Index level of 25,210.8, both have the same distance to call. 4.80%。

Both bull certificates have knock-in levels below the intraday support of 24,877 points and are also close to the Bollinger Bands midline at 24,038 points. This structure intentionally avoids placing the knock-in zone near 25,000 points, instead preserving a buffer for normal intraday volatility.

However, both products still carry leverage close to 19x. Even if the Hang Seng Index (HSI) doesn’t fall to the knock-in level, a decline of just a few hundred points from current levels could lead to a significant drop in the product prices.

UBS Group's 60338 is priced at HK$0.130 with 19.4x leverage; Guotai Junan's 61167 is priced at HK$0.136 with 18.5x leverage. Both have identical knock-in levels, strike prices, and expiry dates, with minimal differences in key terms.

Therefore, when making an actual selection, aside from comparing the less-than-1x difference in leverage, investors should also pay attention to intraday bid-ask spreads, trading liquidity, and quote stability. Both products are better suited for positioning on an HSI breakout rather than treating the 24,000-point level as a hard stop-loss.

How to stage a bullish strategy?

Break above 25,267 points:

If the HSI breaks above 25,267 points and holds steady, watch the area around 25,674 points next. Bull certificates with a knock-in level at 24,000 points offer approximately 4.8% buffer, making them more suitable for capturing follow-through momentum after a breakout.

Retest of 25,000 points:

If the HSI first pulls back to around 25,000 points but holds without breaking below, wait for signs of buying support before considering bull certificates—rather than adding positions solely because the product price has declined.

Break below 24,877 points:

If the Hang Seng Index breaks below the day's low, its short-term structure will weaken. Although there is still room before reaching the call price of 24,000 points, the decline in highly leveraged bull certificates may already be quite significant.

In other words,The call distance serves as the last line of defense and should not directly replace risk control levels in trading.

Bear certificate distribution: call prices ranging between 26,380 and 26,500 points

Two representative bear certificates listed in the product overview have call prices distributed between 26,380 and 26,500 points, approximately 4.64% to 5.11%。

above the current Hang Seng Index level. Both call prices are above the upper Bollinger Band at 25,674 points. Even if the Hang Seng Index first breaks through 25,267 points and then advances toward 25,674 points, these two bear certificates would not immediately enter the call zone.

However, the two products have different risk profiles.

BNP Paribas 58223 has a call price of 26,380 points, representing a distance of 4.64% and offering 21.5x leverage. Its closer call price means the product could react more sensitively to a Hang Seng Index pullback, but if the upward momentum continues, price losses and call risk would also rise more quickly.

UBS Group 57746 has a call price at 26,500 points, 5.11% away, with 19.7x leverage. Compared to BNP Paribas 58223, it offers approximately 120 extra points of buffer and slightly lower leverage, making it more suitable for bearish positions where investors prefer the call price not to be too close.

Neither of these bear warrants is a low-leverage, defensive product. When the Hang Seng Index (HSI) remains in a rebound structure, using counter-trend positions with leverage close to or above 20x requires clearer entry signals than merely observing an overbought RSI.

How should a bearish strategy be staged?

Resistance at 25,267 points:

If the HSI rises near the intraday high and shows clear signs of pressure, first observe whether it falls back to 25,000 points before considering bear warrants. A single-day rejection at the high can only be treated as the first signal.

Resistance around 25,674 points:

If the HSI advances further toward the upper Bollinger Band and then pulls back, technical resistance becomes clearer. For those preferring a wider buffer to the call price, consider UBS Group 57746 with its 26,500-point call level; for those accepting a closer call price and seeking higher leverage, compare with BNP Paribas 58223.

Break below 24,877 points:

If the HSI first breaks below 25,000 points and then falls through 24,877 points, the bearish signal becomes more complete. However, by that time, bear warrant prices may have already risen, so leverage and chasing risk must be reassessed before entering a position.

Break above 25,674 points:

If the Hang Seng Index rises above 25,674 and remains strong, risk control should take priority in bear warrant positions. Failure to reach 26,380 or 26,500 does not mean that losses from holding against the trend remain limited.

With both bull and bear warrants positioned closely, direction should be determined by technical levels.

Currently, the knock-out distances for bull and bear warrants are roughly symmetrical:

– Bull warrant knock-out level: 24,000 points, approximately 4.80% away;

– Bear warrant knock-out level: 26,380 to 26,500 points, approximately 4.64% to 5.11% away.

This indicates that product distribution does not significantly compress either side closer to the current index level. What truly affects positioning is whether the Hang Seng Index can break above 25,267 and, during pullbacks, hold above 25,000 and 24,877.

As an alternative instrument, callable bull/bear certificates (CBBCs) can be replaced with warrants offering more at-the-money terms for comparison.

Investors who wish to avoid mandatory knock-out risk may use Hang Seng Index warrants as an alternative.

Within the product overview, Hang Seng Index call warrant terms include:

For positioning on a breakout above 25,267, UBS Group’s warrant 13632 with a strike price of 25,800 is relatively close to the current level, with a delta of 49.23%, making its terms more responsive to short-term upside moves. Warrants with strike prices of 26,200 and 26,400 are deeper out-of-the-money and would require a larger upward move in the Hang Seng Index for their moneyness to improve significantly.

If the Hang Seng Index falls below 25,000 and 24,877 points, UBS Group's warrant 13336 with a strike price of 24,200 would be relatively closer to the money; Bank of China’s warrant 13234 has a lower strike price and requires a deeper index pullback to improve its sensitivity.

Warrants do not have a knock-out mechanism, but they are still affected by implied volatility, time decay, and moneyness. The difference between bull/bear certificates and warrants lies not only in leverage levels but also in their distinct sources of risk.

Summary: Deploy bull certificates on a breakout; consider bear certificates only if the index retreats from resistance.

The Hang Seng Index rebounded from 22,518 to 25,210 points, significantly repairing its short-term structure, yet it has now reached its first resistance level.

We should currently focus on three key levels:

– 25,267 points: breakout confirmation;

– 25,000 points: short-term support/resistance pivot;

– 24,877 points: First-level actual support.

For bullish deployments, two representative callable bull certificates both have call prices at 24,000 points, approximately 4.8% away—terms better suited to capturing breakout continuation. For bearish deployments, BNP Paribas’ 58223 and UBS Group’s 57746 have call prices at 26,380 and 26,500 points respectively, about 4.6% to 5.1% away; the former offers higher leverage, while the latter provides slightly more defensive distance.

At this stage, it’s unnecessary to simply guess whether the Hang Seng Index has peaked. Whether it can break above 25,267 points and, during pullbacks, hold above 25,000 points will be more informative than focusing solely on a single day’s gain.

Are investors currently waiting for the Hang Seng Index to break above 25,267 points before deploying bull certificates, or watching for resistance reactions near 25,674 points before considering bear certificates?

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