ftse china a50 weekly outlook 30 nov to 04 dec 10665 is the potential upside trigger level to watch

(Click to enlarge charts)

What happened last week

The China A50 Index (proxy for the FTSE China A50) has cracked opened the 10400 intermediate support triggered by a sell-off caused by the fresh investigation probes launched by the China Securities Regulatory Commission in two largest mainland brokerages, Citic Securities and Guosen Securities for “business irregularities”.

Interestingly, the  sell-off has managed to stall at the 9800 key weekly pivotal support. Please click on this link for a review on our prior weekly outlook/strategy.

Key Economic Data Release/Events

• 01 Dec (Tues) – China Non-manufacturing PMI for Nov @0100GMT
• 01 Dec (Tues) – China NBS Manufacturing PMI for Nov @0100GMT
• 01 Dec (Tues) – China Caixin Manufacturing PMI for Nov @0245GMT
• 03 Dec (Thurs) – China Caixin Services PMI for Nov @0145GMT

Key elements

• The recent decline in price action is now resting on its key medium-term support at 9800 which is defined by a former resistance on 08 September to 16 September 2015 now turns support and a Fibonacci retracement cluster (see daily chart).
• In conjunction, the daily (medium-term) RSI oscillator is now resting on its support as well (see daily chart).
• The 4 hour (short-term) Stochastic oscillator has started to inch upwards from its oversold region which suggests that the current downside momentum has started to wane off(see 4 hour chart).
• The intermediate resistance to watch will be at 10665 which is the short-term range top linking the highs of 17 November to 26 November 2015 (see 4 hour chart).
• The key medium-term resistance stands at the 11480/11970 zone which is defined by 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)

Pivot (key support): 9800

Resistance: 10665 & 11480/11970

Next support: 8960

Conclusion

 The Index now needs to break above the 10665 intermediate resistance in order to revive the bulls for a potential upside movement to target the next resistance zone at 11480/11970.

On the other hand, failure to hold above the 9800 weekly pivotal support may damage the medium-term uptrend to see a decline towards the next support at 8960 in the first step.

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