China A50 Index A Signal To Enter Bull Market

China A50 Index (Short Term): A Signal To Enter Bull Market

China A50 Index (CFD) skyrocketed around 9.8% yesterday and also broke above the 2015 high around 15000. In fact, China's Shanghai composite index closed up 5.7% yesterday and rebounded more than 20% from March low. It indicates that the index is entering a bull market.

On Monday, the state-owned China Securities Journal published an article asserting that "cultivating a healthy bull market is important for creating new opportunities (...) In the post Covid-19 world, the economy needs a healthy bull market more than ever."

Last Friday, China's Caixin Services PMI rose to 58.4 in June (53.2 expected) from 55.0 in May. Key findings included: "Business activity and new orders both rise at sharper rates (...) but employment continues to decline (...) Business confidence strengthens to three-year high."

Source: Trading Economic

In the above chart, we could see that the Service PMI is even higher than the data before the outbreak of COVID-19. It indicates that the service industry in China is expanding.

On the daily, China A50 Index (CFD) posted a long ranging bullish bar. Besides, the prices recorded a new 52-week high. Both signals indicate the positive technical outlook.

Bullish readers could set the nearest support level at 14700 (the high of January), while resistance levels would be located at 17860 (138.2% fibonacci projection) and 18935 (161.8% fibonacci projection).

Source: TradingView, GAIN Capital

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