ftse china a50 weekly outlook 12 oct to 16 oct turning positive for a potential multi week rally 155

(Click to enlarge charts)

What happened last week

The China A50 Index (proxy for the FTSE China A50) has reopened on 08 October 2015 after a week-long of holidays to celebrate China’s national day.

Key elements

• Price action has continued to inch higher from the “Black Monday”, 24 August 2015 low of 8045 which confluences closely with a Fibonacci cluster at 8400/8000 (76.4% Fibonacci retracement from 20 March 2014 low to 09 June 2015 high + 1.00 Fibonacci projection from 09 June 2015 high and 10 July 2015 high) (see daily chart).
• The daily (medium-term) RSI oscillator has just broken out of  its resistance and the 50% neutrality level which suggests a revival in upside momentum for the Index (see daily chart).
• As the Index continues to push higher, a higher “swing low” can be seen at the 8990 level (see 4 hour chart).
• On the medium-term (1 to 3 weeks), the significant resistance to watch will be at 10100 which was the former support linking the lows on four occasions (19 January, 06 February, 09 March & 08 July 2015) follow by 11480 next (defined by the pull-back resistance, in dark blue & the 50% the steep down move from 09 June 2015 high to 24 August 2015 low) (see daily & 4 hour charts).
• On the longer-term, the Index has formed a bullish “Hammer” candlestick pattern on the week of the “Black Monday”, 24 August 2015 at the 8400 support (see weekly chart).

Key levels (1 to 3 weeks)

Intermediate support: 9460

Pivot (key support): 8990

Resistance: 10100 & 11480

Next support: 8400/8000

Conclusion

Technical elements have started to turn positive for the Index. As long as the 8990 weekly pivotal support holds and a break above the 10100 upside trigger level is likely to add impetus for a further potential rally to target the 11480 resistance.

However, a break below the 8990 pivotal support may invalidate the expected bullish scenario for a slide to retest the range support at 8400/8000.

Source:  Charts are from eSignal & City Index Advantage Trader

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