Technical Analysis – CHI 50 index extends gains above 200-day SMA

Anthony Charalambous, XM Investment Research Desk

China A50 stock index (Cash) lunged over the flat 200-day simple moving average (SMA) and the 13,692 high in the past sessions, reviving an improving picture. The recent upturn in the 50-day SMA suggests further advancements, as do the rising Ichimoku lines, which reflect growing positive momentum.

Additionally, the MACD has pushed above its red trigger line in the positive zone, while the RSI is rising in the bullish territory. Moreover, the climbing stochastic %K line has entered the overbought section and maintains a positive tone.

To the upside, initial resistance could arise at the 14,001 border. In the event the index also overruns the key peak of 14,241, the price may shoot towards the 14,500 mark and the 23½-month top of 14,678.

Should the index retreat under the 13,692 obstacle, initial support may come from the 200-day SMA at 13,590. Diving lower, the Ichimoku lines and the 100-day SMA in the vicinity of 13,224 could impede the drop from reaching the 50-day SMA at 13,112 and the 13,002 trough underneath.  Further declines below the cloud may then test the 12,887 barrier ahead of the 12,623 support.

Overall, the very short-term picture appears bullish above the 200-day SMA and the 13,002 trough, and a break above 14,001 may upgrade the positive outlook.