Technical Analysis – CHI50 stock index flies to new 1-year peak but enters overbought zone
April 10, 2019 9:26 am
China’s 50 stock index experienced fresh buying interest after beating resistance around the 13,100 level, with the price spiking to a new one-year high of 13,917 early on Wednesday.
While the RSI and the stochastics warn of an overbought market and the MACD suggests a softer trading in the short term as the indicator seems to be losing steam above its red signal line, the market needs to weaken back below 13,100 and the 20-day moving average for traders to resume cautious behavior. The level also coincides with the 61.8% Fibonacci of the one-year old downleg from 14,914 to 10,197. Hence any decisive close below that mark, could shift support down to 12,374, where the price rebounded in late-March. Moving lower, another key barrier is likely to emerge around 11,900 which if broken would switch the medium-term outlook from bullish to neutral.
In the positive scenario, a close above 13,917 and the 78.6% Fibonacci may transform the December uptrend to a more concrete one and fuel further buying interest. In such a case, resistance could initially appear near 14,200 and then at 14,632 before the focus shifts to the 14,914 top.
China’s 50 stock index experienced fresh buying interest after beating resistance around the 13,100 level, with the price spiking to a new one-year high of 13,917 early on Wednesday.
While the RSI and the stochastics warn of an overbought market and the MACD suggests a softer trading in the short term as the indicator seems to be losing steam above its red signal line, the market needs to weaken back below 13,100 and the 20-day moving average for traders to resume cautious behavior. The level also coincides with the 61.8% Fibonacci of the one-year old downleg from 14,914 to 10,197. Hence any decisive close below that mark, could shift support down to 12,374, where the price rebounded in late-March. Moving lower, another key barrier is likely to emerge around 11,900 which if broken would switch the medium-term outlook from bullish to neutral.
In the positive scenario, a close above 13,917 and the 78.6% Fibonacci may transform the December uptrend to a more concrete one and fuel further buying interest. In such a case, resistance could initially appear near 14,200 and then at 14,632 before the focus shifts to the 14,914 top.
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