China A50 stages major bullish breakout to key technical level
Chinese stocks are going vertical in response to the swathe of stimulus measures announced before the market open. China’s A50 Index is no exception, staging a bullish breakout to an import level we can use to build setups around.
The break of the downtrend and 50DMA looks significant on the back of big volumes, seeing futures retest the 200DMA. With MACD and RSI (14) generating bullish signals on momentum, there could be more gains to come.
But let the price action tell you what to do.
If we get a clean break above the 200DMA, consider going long targeting a move back towards horizontal resistance at 12352. Ideally, it would be nice to see a retest and bounce off the 200DMA following the break to bolster the case for upside. A stop could then be placed below the 200DMA for protection.
Alternatively, if the price is unable to break the 200DMA convincingly, consider selling with a stop above the level for protection. Downside targets include the former downtrend and support at 11375.
Given the measures announced today and proximity to Golden Week holidays, the bias is to buy dips or breaks near-term given the possibility of further state support.
Good luck!
DS
The break of the downtrend and 50DMA looks significant on the back of big volumes, seeing futures retest the 200DMA. With MACD and RSI (14) generating bullish signals on momentum, there could be more gains to come.
But let the price action tell you what to do.
If we get a clean break above the 200DMA, consider going long targeting a move back towards horizontal resistance at 12352. Ideally, it would be nice to see a retest and bounce off the 200DMA following the break to bolster the case for upside. A stop could then be placed below the 200DMA for protection.
Alternatively, if the price is unable to break the 200DMA convincingly, consider selling with a stop above the level for protection. Downside targets include the former downtrend and support at 11375.
Given the measures announced today and proximity to Golden Week holidays, the bias is to buy dips or breaks near-term given the possibility of further state support.
Good luck!
DS
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