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ftse china a50 weekly outlook 30 nov to 04 dec 10665 is the potential upside trigger level to watch

Article By: ,  Financial Analyst
November 30, 2015 10:14 PM

(Click to enlarge charts)

What happened last week

The China A50 Index (proxy for the FTSE China A50) has cracked opened the 10400 intermediate support triggered by a sell-off caused by the fresh investigation probes launched by the China Securities Regulatory Commission in two largest mainland brokerages, Citic Securities and Guosen Securities for “business irregularities”.

Interestingly, the  sell-off has managed to stall at the 9800 key weekly pivotal support. Please click on this link for a review on our prior weekly outlook/strategy.

Key Economic Data Release/Events

  • 01 Dec (Tues) – China Non-manufacturing PMI for Nov @0100GMT
  • 01 Dec (Tues) – China NBS Manufacturing PMI for Nov @0100GMT
  • 01 Dec (Tues) – China Caixin Manufacturing PMI for Nov @0245GMT
  • 03 Dec (Thurs) – China Caixin Services PMI for Nov @0145GMT

Key elements

  • The recent decline in price action is now resting on its key medium-term support at 9800 which is defined by a former resistance on 08 September to 16 September 2015 now turns support and a Fibonacci retracement cluster (see daily chart).
  • In conjunction, the daily (medium-term) RSI oscillator is now resting on its support as well (see daily chart).
  • The 4 hour (short-term) Stochastic oscillator has started to inch upwards from its oversold region which suggests that the current downside momentum has started to wane off(see 4 hour chart).
  • The intermediate resistance to watch will be at 10665 which is the short-term range top linking the highs of 17 November to 26 November 2015 (see 4 hour chart).
  • The key medium-term resistance stands at the 11480/11970 zone which is defined by Fibonacci cluster (50%/61.8% Fibonacci retracement of the summer sell-down from 09 June 2015 high to 24 August 2015 low + 1.618 Fibonacci projection from 24 August 2015 low to 08 September 2015 high @8pm projected from 29 September 2015 low @8am) and the 200-day Moving Average (see daily & 4 hour chart).

Key levels (1 to 3 weeks)

Pivot (key support): 9800

Resistance: 10665 & 11480/11970

Next support: 8960

Conclusion

 The Index now needs to break above the 10665 intermediate resistance in order to revive the bulls for a potential upside movement to target the next resistance zone at 11480/11970.

On the other hand, failure to hold above the 9800 weekly pivotal support may damage the medium-term uptrend to see a decline towards the next support at 8960 in the first step.

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