ftse china a50 weekly outlook 16 nov to 20 nov back at 101609800 key support for a potential rally 1

(Click to enlarge charts)

What happened last week

The “last push up” scenario for the China A50 Index (proxy for the FTSE China A50) to test the 11480 did not materialise. It printed a high of 11138 on 09 November 2015 before the pull-back occurred and almost hit our expected downside target of 10160 (printed a low of 10213 on 13 November 2015).

Please click on this link for a review on our prior weekly outlook/strategy.

Key Economic Data Release/Events

• 20 Nov (Fri) – Conference Board Leading Economic Index for Oct @0200GMT

Key elements

• Current price action has managed to inch up from the lower boundary (support) of the medium-term bullish ascending channel (in orange) in place since the “Black Monday”, 24 August 2015 low at 10160 (see 4 hour chart).
• The key medium-term support zone is now at 10160/9800 which also confluences with a Fibonacci retracement cluster (see 4 hour chart)
• The daily (medium-term) RSI oscillator has also managed to inch up from its support and the 50% neutrality level which suggests that upside momentum has resurfaced (see daily chart).
• The upper boundary (resistance) of the ascending channel (in orange) stands at the 11480/11970 zone which also confluences with a Fibonacci cluster (50%/61.8% Fibonacci retracement of the summer sell-down from 09 June 2015 high to 24 August 2015 low + 1.618 Fibonacci projection from 24 August 2015 low to 08 September 2015 high @8pm projected from 29 September 2015 low @8am) and the 200-day Moving Average (see daily & 4 hour chart).

Key levels (1 to 3 weeks)

Intermediate support: 10160

Pivot (key support): 9800

Resistance: 11480/11970

Next support: 8400/8000

Conclusion

The Index is now back at its key medium-term support zone of 10160/9800 and it is now likely to shape a potential rally to target the 11480/11970 resistance.

On the other hand, failure to hold above the 9800 weekly pivotal support may damage the expected bullish move to see a deeper decline to retest the long-term key support zone of 8400/8000 (the area around the “Black Monday”, 24 August 2015 low).

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