Sometimes simple is best. And we may have found a simple setup on the China A50 index.
Sure, the daily chart remains within a downtrend, but it shows the potential to extend its countertrend move higher by at least one more leg in our view.
The index saw a decent rally from the 11,600 area before retracing 50%. A 3-bar bullish reversal pattern has formed (morning star) after two failed attempts to close the day beneath 12,000.
RSI (14) has broken its own bearish trendline and formed a higher low ahead of prices action. If momentum really does lead price, can prices now follow?
Assuming the overnight risk-on rally continues, we could be looking for a move to 12,500 (particularly if China data surprises to the upside today).
Sure, the daily chart remains within a downtrend, but it shows the potential to extend its countertrend move higher by at least one more leg in our view.
The index saw a decent rally from the 11,600 area before retracing 50%. A 3-bar bullish reversal pattern has formed (morning star) after two failed attempts to close the day beneath 12,000.
RSI (14) has broken its own bearish trendline and formed a higher low ahead of prices action. If momentum really does lead price, can prices now follow?
Assuming the overnight risk-on rally continues, we could be looking for a move to 12,500 (particularly if China data surprises to the upside today).
Trade closed: stop reached