The Chinese economy needs additional support.

The yuan stabilizes again, while investors await the outcome of the PBoC meeting today. President Xi Jinping is expected to unveil a long-term vision for the Chinese economy after warning policymakers that there are no easy solutions to accelerate the domestic economic recovery. Additionally, the President has called on the Communist Party to maintain confidence and commitment despite ongoing domestic and international pressures.

The sluggish economy and geopolitical tensions have added pressure on the development of technology, the production of complex electronic equipment, and other key sectors essential for China's long-term growth. This has necessitated further economic stimulus policies to restore investor confidence.

China's economy grew by 4.7% in the second quarter, below the market forecast of 5.1%, and slowed from a 5.3% growth in the first quarter. This is the weakest expansion since 2023. The Chinese economy continues to face several challenges, including a slump in the real estate sector, weak domestic demand, a depreciating yuan, and trade conflicts with the West. The latest meeting is likely to result in more economic stimulus measures, as various economic indicators show a slowdown in several sectors, including reduced sales and lower industrial output growth.

Chinese banks extended new loans worth over 2.13 trillion yuan in June, significantly down from 3.05 trillion yuan in the previous year, and below the market forecast of 2.2 trillion yuan. This decline is due to a rapid decrease in outstanding loans, which fell to 8.1% in June from 9.3% the previous month. Despite efforts by the PBoC and other government agencies to support private and household investment and consumption to boost overall demand and reduce excess supply, challenges remain.

China's unemployment rate stood at 5% in June 2024, matching market expectations. The majority of unemployment remains in urban areas at 4.9%, while the unemployment rate in rural areas slightly increased to 4.8%, indicating a continued slowdown in the country's industrial growth capacity.

Techical analysis data (5H)

Resistance: 7.2618, 7.2658, 7.2705

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 7.2484 - 7.2531 but cannot break the support at 7.2531, you may set a TP at approximately 7.2658 and SL at around 7.2353 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 7.2618 - 7.2658, you may set a TP at approximately 7.2705 and SL at around 7.2484 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 7.2618 - 7.2658 but cannot break the resistance at 7.2618, you may set a TP at approximately 7.2484 and SL at around 7.2705 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 7.2484 - 7.2531, you may set a TP at approximately 7.2353 and SL at around 7.2658 or according to your acceptable risk.

Pivot point July 18, 2024 09:30 PM. GMT+7