ftse china a50 weekly outlook for 06 july to 10 july consolidate below key 1221012600 resistance bef

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What happened last week

The China A50 Index (proxy for the FTSE/Xinhua China A50) has rebounded and retreated below the 12900/13120 intermediate resistance as expected (printed a high of 12568).

Please click on this link for a review on our previous weekly outlook.

Key elements

• The trendline resistance joining the highs since 09 June 2015 is now at 12600 (see daily & 4 hour charts).
• The 12600 resistance also confluences closely with the 38.2% Fibonacci retracement of the recent down move from 09 June 2015 high @8am to 29 June 2015 low @12pm (see 4 hour chart).
• The intermediate term RSI momentum oscillator remains bearish below its resistance and 50% neutrality level (see daily chart).
• The next significant support zone will be at 10640/10180 which confluences with the 50% Fibonacci retracement from  recent up move, wave (1) from 20 March 2014 low to 09 June 2015 high, 1.00 Fibonacci projection from 09 June 2015 high @8am to 24 June 2015 high @4pm and the 200-day Moving Average (in orange) (see daily & 4 hour charts).
• Since the low of 29 June 2015 @12pm, the Index has started to evolve into a short-term impending ‘Symmetrical Triangle” chart formation with upper and lower limits now at 12210 and 11400 respectively (see 4 hour chart).
• The short-term Stochastic momentum oscillator still has room for upside potential before reaching its overbought region which highlights the risk of a short-term bounce/consolidation in the price action of the Index (see 4 hour chart).

Key levels (1 to 3 weeks)

Intermediate resistance: 12210

Pivot (key resistance): 12600

Support: 11400, 10640 & 10180

Next resistance: 13470

Conclusion

Current technical elements suggest that the Index may consolidate (within the “Symmetrical Triangle”) below the 12210/12600 significant medium term resistance zone before a potential final down leg materialises to target the significant support at 10640 with a maximum limit set at 10180.

However, a break above the 12600 weekly pivotal resistance (tightened down from 13470) is likely to invalidate the expected medium term bearish trend to see a push up to retest the 13470 resistance.

Charts are from eSignal & City Index Advantage Trader

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