China’s 50 stock index (cash) is recording another stunning green day, rallying by more than 5% since the latest rebound on the 20-day simple moving average (SMA) to re-challenge the 2020 high of 14,678.
The sharp move drove the pair to overbought territory according to the RSI, which pierced above 70. However, the indicator has yet to reverse lower and the stochastics seem ready to return above 80, so the rally may still have some fuel to burn.
Above the 14,678 resistance, the 2018 record peak of 14,914 is the only resistance in sight. Clearing that crucial border, the bulls could head for the 15,100 and 15,200 psychological levels.
Failure to lift the 14,678 border could pressure the price to 14,240. A deeper decline may seek support within the 13,900-13,600 congested area, where the flattening 200-day SMA is currently waiting to post a bullish cross with the 50-day SMA.
In brief, the CHI 50 index is expected to attract some buying interest in the short-term, though downside corrections cannot be excluded as the market seems to be trading within overbought waters.
