CHINA A50 Is this 1W MA50 rebound breaking the bearish trend?

Jun 14On December 21 2023 (see chart below) the China A50 index (CN50) gave us the best buy entry possible on more than 1 year span:

The price increased on this Bullish Leg and a month ago reached the top (Lower Highs trend-line) of the Falling Wedge. At the same time, it broke above the 1W MA100 (green trend-line) for the first time since December 28 2021, giving the first long-term buy signal in years.

Regardless of this signal, the index got rejected at the top of the Falling Wedge and is on a 4 week decline. However it reached this week the 1W MA50 (blue trend-line) again and so far reacted positively by holding it. As long as it holds and closes the 1W candles above it, it is more likely that this will transition into a rebound, which will be the 2nd and final long-term buy signal.

In that case, we expect the index to finally break above the Falling Wedge and stage a long-term pursuit of the 1W MA200 (orange trend-line). Our Target will be 13550 (slightly below Resistance 1).

If however the 1W MA50 breaks (closes candle below it), we will take the small loss and open a sell, targeting 11800 (the 0.5 Fibonacci level), similar to the March 14 2023 decline. The confirmation for this signal will come if the 1W MACD forms a Bearish Cross.

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