A50 Index Intraday Trend Remains Up on Mixed PMI Data

A50 Index currently rises around 0.2% after releasing the China PMI data....

A50 Index currently rises around 0.2% after releasing the China PMI data.

China's official Manufacturing PMI fell to 50.8 in April (51.0 expected) from 52.0 in March while Non-Manufacturing PMI climbed to 53.2 (52.5 expected) from 52.3.

China's Caixin Manufacturing PMI dropped to 49.4 in April (50.5 expected) from 50.1 in March. The key findings included: "Output continues to recover, albeit at a mild pace (...) .but total new work declines again as export sales plummet (...) Input costs and output charges both fall."

In those data, both official and Caixin Manufacturing PMI data are worse than the expectation. The Caixin's one even dropped below 50. The data suggests a mixed signal as 50 is the threshold to identify the expansion or contraction of the economy. However, the official Non-Manufacturing PMI is better than the expectation and shows the growth of economic activity.

From a technical point of view, the A50 index has validated a bullish breakout of the consolidation zone on the 30 minutes chart, indicating the resumption of the recent uptrend. Besides, the index has recorded a series of higher tops and higher bottoms since March 22. It suggests that the trend remains bullish.

The RSI reversed down after challenging the overbought level at 70. This momentum indicator suggests that the prices may have a consolidation move. However, the RSI remains bullish as the RSI does not break the support zone between 42 and 47.

In this case, as long as the support level at 13410 (around the rising 50-period moving average) is not broken, the index prices would challenge to the resistance levels at 13640 and 13740, representing 100% and 127.2% measured move of the previous up move. On the other hand, crossing below 13410 would erase the bullish bias and bring a return to the support level at 13270.

TradingView chart of China A50.  Analysed on April 2020 by FOREX.com

Source: GAIN Capital, TradingView

More from A50

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account