ftse china a50 weekly outlook for 03 aug to 07 aug turn neutral between 11300 1018010100 956422015

(Click to enlarge charts)

What happened earlier

The China A50 Index (proxy for the FTSE/Xinhua China A50 has broken below the 11300/10970 weekly pivotal support. Last week’s price action has invalidated the corrective push up scenario within an expected multi-month range consolidation phase.

Please click on this link for more details on our last weekly outlook.

Key elements

• The Index is still being capped by its trendlline resistance (in pink) joining the highs since 09 June 2015 at 11300 (see daily chart).
• Current price action has pierced below the 200-day Moving Average (in orange) which is now acting as a resistance at around 11300 (see daily chart).
• The intermediate term RSI oscillator has managed to stage a rebound from its former trendline resistance now turns pull-back support (see daily chart)
• The next significant resistance at 12600/12950 also confluences with the downward 50-day Moving Average (in blue) and the 61.8% Fibonacci retracement of the recent steep decline from 09 June 2015 high @8am to 08 July 2015 low @12pm (see daily & 4 hour charts).
• The short-term Stochastic oscillator is coming close to its extreme overbought level  which suggests limited upside potential (see 4 hour chart).

Key levels (1 to 3 weeks)

Resistance: 11300 & 12600/12980

Support: 10180/10100 & 9700/9300

Conclusion

Technical elements are mixed at the moment. Therefore, it will be more prudent to turn neutral from a multi-week perspective at this juncture rather than having a directional bias.  The key support and resistance to watch will be at 10180/10100 and 11300 respectively.

Only a clear break above the resistance at 11300 is likely to trigger a potential push up to target the next resistance at 12600/12980.

On the other hand, failure to hold above 10180/10100 is likely to see a further slide to test the long-term key support at 9700/9300.

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