China’s 50 stock index (CHI 50) has rebounded somewhat after falling to the eight-month low of 12,520 on February. Currently, the price struggles beneath the 200-day simple moving average (SMA), which overlaps with the area of the 23.6% Fibonacci retracement level of the up leg from 10,197-14,678 of 13,621 and the 13,570 barrier.
The momentum indicators now suggest that the market sentiment might get better as the RSI is approaching the positive territory as it flirts with the 50 level. The stochastic also looks to be changing direction moving up towards 80 level again.
Should bullish dynamics dominate in the near term, the market might revisit the 40-day SMA at 13,946 before meeting the lower surface of the Ichimoku cloud of 14,056. Above that, the area around the two-year high of 14,678 and the 14,914 resistance from 2018 could turn into possible barriers in focus.
Alternatively, a failing attempt to jump above the crucial 13,570 region, the index could meet support at the red Tenkan-sen line near 13,091 and the 38.2% Fibo of 12,969. Further down, the 12,670 barrier and the eight-month trough of 12,520 could be strong levels to watch.
In the short-term picture, the downfall from 7,902 is still active and hence the outlook remains negative as the index is still trading below the SMAs and the 23.6% Fibo.