ftse china a50 weekly outlook for 04 may to 08 may appears toppish below 14850 563082015

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What happened last week

The China A50 Index (proxy for the FTSE/Xinhua China A50) has traded sideways after its relentless upside movement seen in the past one month (up by 34% from the low of 13 March 2015 to a high of 14557 seen on 28 April 2015).

Key elements

• Price action is now coming close to the upper boundary (resistance) of the medium term ascending channel (in orange) in place since 19 November 2014 at 14850 (see daily chart).
• The 14850 also corresponds to the upper boundary of a short-term bearish ascending wedge configuration (in pink) in place since 17 April 2015 and a Fibonacci projection cluster (see 4 hour chart).
• The 20-day Moving Average (in red) and lower boundary of the short-term ascending wedge are supporting the Index at 13900 (see daily & 4 hour charts).
• The median line of the medium term ascending channel stands at 12860 which is also the 38.2% Fibonacci retracement from 09 March 2015 low to 28 April 2015 high (see daily chart).
• The short-term Stochastic oscillator still has room for further upside potential before reaching its “extreme” overbought level (see 4 hour chart).

Key levels (1 to 3 weeks)

Pivot (key resistance): 14850

Support: 13900 & 13130/12860

Next resistance: 15860

Conclusion

Based on current technical elements, the Index appears toppish on the intermediate term (1 to 3 weeks). Right now, the Index may see a potential final push up towards the 14850 pivotal resistance to complete the wave structure of the impending bearish “Ascending Wedge” configuration (as depicted in the 4 hour chart) before a potential downleg occurs to retest 13900. A break below 13900 is likely to trigger a deeper decline to target the 13130/12860 support zone.

On the other hand, a clearance above 14850 may see a further squeeze up to target the next resistance at 15860.

Disclaimer

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