China A50 Index (Short Term): Supported by a Rising Trend Line
Medion Jim August 6, 2020 10:45 PM
China A50 Index posted a pullback after soaring around 35% from the low of March to the high of July at 16465. Then, Index has started to rebound since July 27. What shall we arrange the trade set up in August?
In this week, Caixin China manufacturing PMI rose to 52.8 in July (vs 51.1 expected) from 51.2 in June, while services PMI dropped to 54.1 (vs 58.0 expected) from 58.4. For the PMI data, although services PMI unexpectedly dropped, both PMI data is still above the expansion level of 50.
More important economic data will come next week. Investors should focus on the CPI (+2.6% on year expected), PPI (-2.5% on year expected), industrial production (+5.1% on year expected) and retail sales (+0.1% on year expected).
From a technical point view, China A50 Index remains supported by a rising trend line and 50-day moving average on a daily chart.
Currently, the index prices has confirmed a bullish breakout of falling wedge pattern, indicating the resumption of previous up trend.
Bullish readers could set the support level at 14670 (the high of January), while the resistance levels would be located at 16465 (the previous high) and 16935 (127.2% fibonacci expansion).
Source: Gain Capital, TradingView
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