Short Term Outlook of FTSE China A50 Index Key Resistance Level at 13637

Short Term Outlook of FTSE China A50 Index: Key Resistance Level at 13637

The China economy is affected by an outbreak of Coronavirus. The government announced that 1Q GDP dropped 6.8% on year (-6.0% expected) last week, recording the first contraction within 30 years. Besides, industrial production fell 1.1% in March (-6.2% expected) and retail sales declined 15.8% (-10.0% expected). In addition, China exports dropped 6.6% on year (-13.9% expected) and imports fell 0.9% (-9.8% expected). We can see that industrial production, exports and imports data for March are much better than the expectation. It suggests that China's trading and production activities do not look so bad.

Secondly, China's economy is reopening as the new Coronaviurs infected cases in China are being low. The new cases of Coronavirus added less than 100 within this week. However, China still faces a challenge for weaker demand of the global economy as the number of new cases in the worldwide remains serious.

The investors should focus on official April manufacturing PMI (51.0 expected) and non-manufacturing PMI (50.5 expected) next week as the data could give an insight of the recent China economic performance.

From a technical point of review, the A50 Index would be bearish as the prices remain capped by a declining trend line drawn from January. The RSI stays around 50 and has not crossed above the previous high at 59, suggesting the lack of upward momentum for prices. Therefore, as long as 13637 (around the high of March 13) holds on the upside, the index prices would return to the overlap support base at 12416 and 12085 in extension.

On the other hand, a break above 13637 would indicate a breakout of the declining trend line and bring a stronger rebound to the second resistance level at 14198.

Source: GAIN Capital, TradingView

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.