China A50 Index and CSC Financial Start Their New Upmove

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By :  ,  Financial Analyst

Yesterday, Caixin China manufacturing PMI rose to 51.2 in June (50.5 expected) from 50.7 in May. Key findings included: "Output expands again as sector continues to recover from COVID-19 crisis (...) Total new work increases for the first time since January. (...) but external demand remains subdued."

Chart analysis tracking China's Caixin Manufacturing PMI (exceeds forecasts). Analysed in July 2020

Source: Trading Economics (Caixin China manufacturing PMI)

In the above chart, Caixin China manufacturing PMI has shown a recovery from March low. The data suggested that China's manufacturing activities are improving and expanding after the outbreak of COVID-19.

China A50 Index: Furthe Upside

China A50 Index is lifted by the solid Caixin China manufacturing PMI data. Technically, the Index broke above the consolidation zone between 13980 and 13480 on the daily chart, suggesting the resumption of the uptrend since March low.

The RSI is above its overbought level at 70, but has not displayed any reversal signal.

Bullish readers should set the support level at 13670 (the low of June 23), while resistance levels would be located at 14700 (the high of January) and 15550 (127.2% retracement)

Chart analysis demonstrating China A50 Index And Csc Financial Start Their New Up move. Analysed in July 2020

Source: GAIN Capital, TradingView

Hang Seng Index: Waiting for the breakout signal

Hong Kong's Hang Seng Index jumped more than 1% after the holiday of SAR Establishment Day. In fact, The technical outlook Hang Seng Index is still mixed as the prices are trading within the narrow zone, which is drawn by a declining trend line from March and a rising trend line from May.

Investors should focus on the breakout signal to confirm the resumption of the uptrend. Only a break above 25050 (the high of June 24) would trigger a rise to fill the gap at 26000.

Alternatively, a break below 23700 (the low of June 15) would continue the choppy trading and might return to 22500 (the low of May).

Chart showing Hang Seng Index. Analysed in July 2020

Source: GAIN Capital, TradingView

CSC Financial(6066.HK): Rounded bottom breakout

From a technical point of view, investment management group CSC Financial (6066.HK) is gathering upside momentum as shown on the daily chart. In fact, it has broken above its previous double-top, marked in June this year and February last year, after forming a rounded bottom pattern. Bullish investors may consider $8.00 as the nearest support, with prices trending to test the 1st and 2nd resistance at $9.75 and $10.60 respectively. Alternatively, a break below $8.00 is likely to trigger a pull-back to the next support at $7.40.

Chart showing CSC Financial (6066.HK). Analysed in July 2020

Source: GAIN Capital, TradingView

Related tags: China A50 Equities PMI

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