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Hang Seng Index rebounded to 25,000 but faced resistance: bullish warrants should initially target 24,300, while bearish warrants need to guard against another test of the upper Bollinger Band.

Hang Seng Index $Hang Seng Index (800000.HK)$ On July 17, it closed at 24,562, down 446 points or 1.78%. The index rose intraday to as high as 25,166 but failed to hold the gains, retreating to a low of 24,332 and closing near the lower half of the day's range.

Over the recent period, the Hang Seng Index has clearly rebounded from its low of 22,518. Short-term sentiment has shifted from oversold conditions toward seeking direction again within the 24,000–25,000 range. This day’s price action deserves attention—not just because of the decline, but also due to renewed selling pressure observed around the 25,000 level.

We understand everyone has their own analysis and outlook on the market; let’s first examine what to watch for in current positioning based on technical levels and warrant terms.

Technical Levels: Resistance remains at 25,000; 24,300 has become the first line of defense.

The current Bollinger Bands for the Hang Seng Index are:

Middle Band: approximately 23,741

Upper Band: approximately 25,012

Lower Band: approximately 22,471

The index reached an intraday high of 25,166 points, briefly piercing above the upper Bollinger Band, but subsequently pulled back and closed below the upper band again. This price action suggests that the 25,000–25,200 range still poses temporary resistance; without sustained buying interest, the index is likely to consolidate at higher levels first.

In the short term, we can initially monitor the following levels:

Upside resistance

First level: 25,000–25,166 points

This zone represents the confluence of the upper Bollinger Band, a psychological round number, and the day’s high. For the Hang Seng Index to extend its rebound that began from 22,518 points, it must break above and sustain this level.

Second level: 25,500–25,800 points

This area aligns with the previous trading range and multiple prior peaks. If the index only briefly breaches 25,000 points without accompanying improvement in trading volume and momentum, it may face profit-taking again upon reaching this zone.

Support levels below:

First support: 24,300–24,500 points

The intraday low was at 24,332 points, while 24,500 points currently serves as a key short-term battleground between bulls and bears. If the index holds above this range, it can maintain its current consolidation pattern at higher levels.

Second level: 23,700 to 24,000 points

The Bollinger Band midline is around 23,741 points, which also aligns closely with the consolidation zone seen during the earlier rebound. If the Hang Seng Index (HSI) breaks below 24,300 points, this area would become the next significant support zone.

The short-term RSI is currently around 60.8, while the medium-to-short-term RSI ranges between 50 and 56, indicating that the index has moved out of oversold territory but has not yet entered extreme overbought conditions. In other words, the HSI still has room to test higher levels, though resistance near the 25,000-point mark has clearly emerged.

Bull warrant distribution: 3% to 5% distance is closest to spot price; 5% to 8% is more suitable for waiting after consolidation before moving higher

There are approximately 1,480 HSI bull warrants across the entire market. Categorized by knock-out distance:

Knock-out Distance Number of Bull Warrants Terms Characteristics

Below 3% 96 Higher leverage, but intraday volatility can easily trigger knock-out

3% to 5% 123 Close to short-term support; suitable for positions with clear stop-loss strategy

5% to 8% 209 More buffer; suitable for riding a continued rebound

Above 8% 1,052 Lower knock-out risk, but leverage is generally lower

In terms of quantity, the majority of bull certificates in the market have knock-in levels more than 8% away, indicating ample supply of products with wider buffers. However, those truly better suited for short-term trading are still primarily concentrated in the **3% to 8%** range.

The Hang Seng Index closed at 24,562 points. Based on the current level:

Approximately 3% below is around 23,825 points

Approximately 5% below is around 23,334 points

Approximately 8% below is around 22,597 points

Therefore, bull certificates with buffers of 3% to 5% typically have knock-in levels near the 23,300–23,800 point range, which aligns closely with the Bollinger Bands midline and the second level of support.

The advantage of these products is their higher leverage, but if the Hang Seng Index breaks below 24,300 points and retreats toward 23,700 points, the risk of knock-in rises sharply.

Representative bull certificates: both are positioned at approximately 4% to 5% distance

The two representative bull certificates listed in the product overview are:

UBS Group 55327

Strike price: 23,400 points

Knock-out price: 23,500 points

Distance to knock-out: approximately 4.32%

Leverage: approximately 22.3x

Premium: approximately -0.25%

This bull certificate’s knock-out price is slightly below the Bollinger Band midline at 23,741 points. If investors believe the Hang Seng Index (HSI), even if it pulls back, will still hold above the 23,700–24,000 point range, these terms offer higher sensitivity.

However, leverage exceeding 22x also means prices can move very quickly. If the HSI drops by 300 points from 24,562 points, the distance to the knock-out level would narrow significantly—this product should not be viewed as a defensive instrument suitable for long-term holding.

Citi 54152

Strike price: 23,316 points

Knock-out price: 23,416 points

Knock-in distance: approximately 4.67%

Leverage: approximately 20.5x

Premium: approximately -0.19%

This product’s knock-in price is 84 points lower than UBS Group's 55327, offering slightly more buffer, with leverage correspondingly reduced to around 20.5x.

The directional sensitivity of both products is similar; the main differences are:

UBS Group's 55327 has higher leverage and is better suited for short-term momentum chasing after a confirmed rebound.

Citi's 54152 has a slightly wider knock-in distance, making it more suitable if allowing the index to consolidate modestly first.

If the Hang Seng Index reclaims the 24,800 level and challenges 25,000 again, UBS Group's 55327 would theoretically react slightly faster; if the index continues fluctuating between 24,300 and 24,800, Citi's 54152 would offer relatively more practical buffer.

Bear warrant distribution: Products with 3% to 5% knock-in distances are more concentrated, with the 25,500 level being the primary risk zone.

There are approximately 1,213 Hang Seng Index bear warrants across the entire market. Their knock-in distance distribution is as follows:

Knock-in Distance Bear Warrant Count Terms Characteristics

Below 3% 14 warrants Extremely close to spot price, with very little room for error

3% to 5% 124 warrants Higher leverage, knock-in levels near 25,300 to 25,800 points

5% to 8% 193 warrants Can withstand the index testing new highs again

Above 8% 882 warrants Greater buffer, but reduced sensitivity to directional moves

Compared with bull warrants, there are only 14 Hang Seng Index bear warrants with a knock-in distance below 3%, indicating limited availability of extremely close-to-the-money products. The main short-term supply is concentrated in the 3% to 5% range, i.e., knock-in levels around 25,300 to 25,800 points.

This range precisely covers the next resistance zone following the breakout above 25,000 points. Therefore, investors bearish on the Hang Seng Index who choose bear warrants in the 3%–5% range must accept a risk: even if the index eventually declines, it may first test upward toward 25,300–25,500 points, triggering early knock-in of these products.

Representative bear warrants: 3.82% and 4.63%—strategies differ

UBS Group 53746

Strike Price: 25,600 points

Call price: 25,500 points

Distance to call: approximately 3.82%

Leverage: approximately 24.6x

Premium: approximately -0.15%

The call price of 25,500 points sits just below the second resistance zone. This bear warrant is more suitable for investors who believe 25,000 points has formed a short-term top and that the Hang Seng Index may struggle to break higher.

With leverage close to 25x, it will be highly sensitive if the index declines; however, if the Hang Seng Index breaks above 25,166 points and climbs another ~300 points, the risk of being called increases sharply.

Therefore, UBS Group 53746 is better suited for:

Deploying when the index rebounds and meets resistance between 24,900 and 25,100 points

Having a clear stop-loss level

Holding positions on an intraday or very short-term basis

Going short near the 24,500 level may appear to offer room for profit, but the index could rebound by several hundred points at any time, making this entry position potentially suboptimal.

Morgan Stanley CBBC 55498

Strike Price: 25,800 points

Knock-in Price: 25,700 points

Distance to Knock-in: approximately 4.63%

Leverage: approximately 19.8x

Premium: approximately 0.01%

Morgan Stanley CBBC 55498 has a knock-in price 200 points higher than UBS Group CBBC 53746, with leverage reduced to approximately 19.8x.

These terms allow the Hang Seng Index to retest the 25,500 level without immediate knock-in, making it more suitable for investors who believe the index will continue fluctuating upward but ultimately struggle to break through the 25,700–25,800 range.

The trade-off between these two products is quite straightforward:

UBS Group 53746: Higher leverage, but 25,500 is already the call price.

Morrison 55498: Lower leverage, but can withstand an additional 200-point upward fluctuation.

If the bearish rationale is merely the intraday pullback from the high rather than confirmation that the rebound has ended, the more distant Morrison 55498 would be easier to manage than at-the-money bear warrants.

Current product strategy: Between 24,300 and 25,000 points, avoid chasing directional positions in the middle of the range.

The Hang Seng Index is currently trading within a short-term range of approximately 24,300 to 25,000 points. Closing at 24,562, it is neither near support nor resistance, making both bull and bear warrants prone to initial adverse movement before resuming their original direction.

Bullish strategy

If the Hang Seng Index holds above 24,300 and breaks back above 24,800, consider bull warrants with 4%–5% distance-to-call to capture another test of the 25,000 level.

If the index first breaks below 24,300, avoid adding to bull warrant positions solely because their prices have declined. The next key support zone lies between 23,700 and 24,000; bull warrants with call prices around 23,400–23,500 will start entering the risk zone.

Bearish strategy

If the Hang Seng Index rebounds to 25,000–25,166 and faces resistance again, deploying bear warrants would offer a clearer risk-reward profile.

For a more aggressive stance, consider products with a call price near 25,500 points; if you believe the index may first test highs around 25,500 points, then products with a call price of 25,700 points or higher would offer better buffer.

If the Hang Seng Index drops directly below 24,300 points before chasing bear warrants, note that the index may already be approaching short-term support, and bear warrants could face a rebound following a sharp decline.

Warrants as an alternative instrument: suitable for strategies that do not wish to set a call price.

For investors bullish on the Hang Seng Index but wishing to avoid the mandatory call risk of bull certificates, representative call warrants listed in the product overview include:

UBS Group 25916: strike price at 25,000 points, 1.8% out-of-the-money, effective gearing of 10.6x

Morgan Stanley 27695: strike price at 25,125 points, 2.3% out-of-the-money, effective gearing of 10.7x

Citi 14246: strike price at 26,200 points, 6.7% out-of-the-money, effective gearing of 9.7x

The first two are closer to the 25,000-point level, making them suitable for capturing breakouts; Citi 14246 has a more distant strike price, so its delta and short-term sensitivity require special attention.

On the bearish side:

UBS Group 27923: strike price at 23,681 points, 3.6% out-of-the-money, effective gearing of 12.6x

Citi 28275: strike price at 24,380 points, 0.7% out-of-the-money, effective gearing of 15.9x

Citi 28275 is closer to the spot price; if the Hang Seng Index breaks below 24,300 points, its directional sensitivity will be more direct. However, with a shorter time to expiry, time decay should still be monitored during the holding period.

Overall, the clearest signal for the Hang Seng Index right now is resistance between 25,000 and 25,166 points, with 24,300 points serving as the first short-term support level. Until the index breaks out of this range, it’s not advisable to deploy bull or bear warrants based solely on leverage; instead, it’s more critical to consider whether the knock-out price crosses the next key technical level.

Recently, when trading Hang Seng Index bull and bear warrants, would you wait for a breakout above 25,000 points first, or focus on whether 24,300 points can hold firm?

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