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The Chinese market is lagging behind Wall Street and European indices due to the ongoing regulatory pressure. Investor sentiment in the region is also under pressure from worsening macroeconomic indicators.

The latest initiatives by the Chinese government include a strict restriction on online gaming for teenagers, limiting them to just one hour daily on Fridays and weekends.

The manufacturing PMI fell in August from 50.4 to 50.1, and the non-manufacturing indicator collapsed from 53.3 to 47.5, reflecting a tight lockdown to quell the coronavirus outbreak.

Nevertheless, markets have managed to digest this negative sentiment during Asian trading. There are emerging signs that investors found Chinese equities attractive enough to buy, even given the risks involved.

The Shanghai China A50 blue-chip index gained support on the decline to 14500, an area of highs set in 2015 and early 2017 and 2020. The former resistance area now acts as a major support line.

Technically, there is sufficient room on the bearish side for a decline into the area of 13300 by the end of the year, where the lower boundary of the long-term uptrend channel passes.

Similar potential remains in the Hang Seng, whose long-term uptrend channel support passes through about 22,000 by the end of the year against the current 25700.

The Hong Kong-listed mainland equity index, H-shares, is close to a long-term support level of around 9000.

In all three cases, on the weekly charts, we can see attempts to move out of the oversold area and signs of RSI and index level divergence, with new price lows corresponding to higher indicator levels.

On the daily charts, the divergence between the RSI and the price is even more visible, making the Chinese market interesting for long-term investors who believe in the potential of the second world economy.

It is worth cautioning against aggressive buying of these indices or individual stocks right now. So far, there are no signs that China intends to stop the overhaul of regulations for technology and online companies. The People's Bank of China has not yet gone for a loosening of monetary policy, although many market observers expect this move later this year.

Perhaps the more cautious speculators should not look for an entry point at the lowest price but join the buying after signs confirming a change in the regulator's mood. It could be the easing of PBC policy or signals that no new restrictions for technology companies are planned.

France consumer spending dropped -2.2% mom in July, below expectation of 0.7% mom rise. This decrease came from the fallback in purchases of manufactured goods (–2.7%) and the sharp drop in food consumption (–2.9%). Energy expenditure, meanwhile, increased moderately (+1.0%).

GDP grew 1.1% qoq in Q2 in volume term better than expectation of 0.9% qoq. GDP closed one quarter of the gap to is pre-crisis level at the end of 2020. It stood -3.2% below its level in Q4 2019.

Daily Pivots: (S1) 151.02; (P) 151.16; (R1) 151.36; More...

Intraday bias in GBP/JPY is mildly on the upside as rebound from 149.16 is resuming. Further rise would be seen to 153.42 resistance first. Break there will argue that whole corrective pattern from 156.05 has completed, and bring retest of this high. On the downside, however, below 150.03 minor support will turn bias back to the downside for 149.16 support and below.

In the bigger picture, rise from 123.94 is seen as the third leg of the pattern from 122.75 (2016 low). As long as 149.03 support holds, such rise would still resume at a later stage. However, sustained break of 149.03 support will indicate rejection by 156.59. Fall from 156.05 would be at least correcting the whole rise from 123.94. Deeper fall would be seen back 38.2% retracement of 123.94 to 156.05 at 143.78 first.

Daily Pivots: (S1) 129.55; (P) 129.63; (R1) 129.77; More....

EUR/JPY's rebound from 127.91 short term bottom resumes after brief consolidations. Intraday bias is back on the upside for 130.54 resistance. Sustained break there will argue that whole correction from 134.11 has completed and turn near term outlook bullish. Nevertheless, on the downside, below 129.14 minor support will turn bias back to the downside for retesting 127.91 low instead.

In the bigger picture, rise from 114.42 is seen as a medium term rising leg inside a long term sideway pattern. As long as 127.07 resistance turned support holds, further rise is still expected to retest 137.49 (2018 high). However, firm break of 127.07 will argue that the medium term trend has reversed, deeper fall would be seen to 61.8% retracement of 114.42 to 134.11 at 121.94.

Daily Pivots: (S1) 0.8568; (P) 0.8575; (R1) 0.8583; More...

Range trading continues in EUR/GBP and intraday bias remains neutral first. Further rise is expected as long as 0.8504 support holds. On the upside, above 0.8592 will resume the rise form 0.8448 to 0.8668 resistance next. Firm break there will be a strong sign of near term bullish reversal at least On the downside, however, break of 0.8504 will turn bias back to the downside for retesting 0.8448 low instead.

In the bigger picture, price actions from 0.9499 (2020 high) are still seen as developing into a corrective pattern. Deeper fall could be seen as long as 0.8668 resistance holds, towards long term support at 0.8276. However, firm break of 0.8668 resistance would argue that a medium term bottom was already formed. Stronger rise would be seen to 0.8861 support turned resistance to confirm completion of the corrective pattern.

Daily Pivots: (S1) 1.6134; (P) 1.6163; (R1) 1.6198; More...

EUR/AUD's fall from 1.6434 short term top is resuming after brief recovery. Intraday bias remains mildly on the downside for 1.5898 structural support first. Sustained break there will argue that choppy rise from 1.5250 has completed already. Outlook will be turned bearish for retesting 1.5250 low. On the upside, however, above 1.6263 minor resistance will retain near term bullishness, and turn bias back to the upside for 1.6434 high instead.

In the bigger picture, rise from 1.5250 medium term bottom is currently seen as a correction to the down trend from 1.9799 first. Stronger rise would be seen to 38.2% retracement of 1.9799 to 1.5250 at 1.6988 next. We'd tentatively expect strong resistance from there to limit upside, at least on first attempt. Meanwhile, break of 1.5898 support will indicate that the rebound has completed and bring retest of 1.5250 low.

Bulls regained traction and accelerated in early Tuesday’s trading after Monday’s pause.

Lift through Fibo barriers at 1.1806/15 (23.6% of 1.2266/1.1664 / 61.8% of 1.1908/1.1664) dented strong obstacle at 1.1832 (base of thick daily cloud), where strong headwinds could be expected.

The Euro continues to benefit from weaker dollar, deflated by dovish tone from Fed Chair Powell last Friday, while bullish daily studies contribute to positive near-term outlook.

Consolidation under the cloud base is likely to precede fresh push higher, with dips expected to stay above daily Tenkan-sen (1.1786) and provide better buying opportunities.

Penetration and close within the cloud is needed to confirm bullish signals and expose next key barriers at 1.1894/1.1908 (Fibo 38.2% of 1.2266/1.1664 / July 30 lower top.

Res: 1.1832, 1.1850, 1.1881, 1.1894.
Sup: 1.1806, 1.1786, 1.1757, 1.1734.

Daily Pivots: (S1) 1.0771; (P) 1.0799; (R1) 1.0849; More....

EUR/CHF's rebound from 1.0694 resumed after brief retreat and intraday bias is back on the upside for 1.0839 resistance. Sustained break there will turn near term outlook bullish for 1.0863/0985 resistance zone. On the downside, break of 1.0739 will turn bias back to the downside for 1.0694 low instead.

In the bigger picture, rebound from 1.0505 (2020 low) should have completed at 1.1149 already. The three-wave corrective structure argues that the downtrend from 1.2004 (2018 high) is not over yet. Medium term outlook will now stay bearish as long as 55 week EMA (now at 1.0859) holds. Break of 1.0505 low would be seen at a later stage.

The US Dollar edged lower by 46 pips or 0.36% against the Canadian Dollar on Monday. The USD/CAD currency pair tested the support level at 1.2581 during Monday's trading session.

Given that the 50– and 200– hour simple moving averages are above the price level, sellers could continue to pressure the exchange rate lower within the following trading session.

However, if the currency exchange rate fails to break the support level at 1.2581, a brief pullback towards the 1.2650 could be expected today.

Since yesterday's trading session, the British Pound has edged higher by 54 pips or 0.36% against the Japanese Yen. The currency pair breached the resistance line at 151.45 on Tuesday morning.

Given that the exchange rate has breached the resistance level at 151.45, bullish traders could continue to push the GBP/JPY pair higher during the following trading session.

However, buyers could encounter resistance near the 151.90 level within Tuesday's trading session.