Best of the Week
Most Popular
1.BrExit House Prices Crash, Flat or Rally? UK Housing Market Affordability Crisis - Nadeem_Walayat
2.Stocks Bull Market Climbs Wall of Worry, Bubble? When Will it End? - Nadeem_Walayat
3.Gold Price Is Now On Its Way To All-Time Highs - Hubert_Moolman
4.Deutche Bank Stock Price Crash - The EU Has Problems Far Beyond the Brexit - Harry_Dent
5.UK interest Rate PANIC CUT! As Banks Prepare to Steal Customer Deposits - Nadeem_Walayat
6.Gold and Silver Bull Phase 1 : Final Impulse Dead Ahead - Plunger
7.Central Bankers Fighting An Unprecedented Global Economic Slowdown - Gordon_T_Long
8.Putin Hacking Hillary for Trump, Russia's Manchurian Candidate? - Nadeem_Walayat
9.Stock Market Insiders Are Secretly Selling, Cycle Top Next Month - Chris_Vermeulen
10.Gold Sector - Is it time to Back up the Truck? – Mortgage the Farm? - Peter_Degraaf
Free Silver
Last 7 days
Fundamentals for Uranium look great; is the Uranium Market ready to soar? - 29th Aug 16
3 Ways to Profit from the Stressed-Out American Consumer - 29th Aug 16
Have The Markets Become Too Big to Fail? - 29th Aug 16
Pakistan Booming House Prices Housing Market Mania Kabza Mafia Warning! - 29th Aug 16
Post Yellen = Market Confusion - 28th Aug 16
Theresa May Instructs Police, NHS Gp's, Public Sector To Stop Racial Discrimination in Service Delivery - 28th Aug 16
Ignore Yellen and Buy the Dip in Precious Metals - 27th Aug 16
SPX Downtrend Should be Underway - 27th Aug 16
Unraveling the Secular Economic Stagnation Story - 27th Aug 16
The Precious Metals Sector and the Fed. . . - 27th Aug 16
Stock Market - All Is Calm, All Is Not Right - 27th Aug 16
Gold Junior Stocks Q2 2016 Fundamentals - 26th Aug 16
Buy Gold’s August Dip? Gold’s Monthly Sweet Spot In September - 26th Aug 16
The IMF’s Internal Audit Reveals Its Incompetence and Massive Rule Breaking - 26th Aug 16
Commodities Are the Best Bargain Now—Here’s What to Buy - 26th Aug 16
Why I Left Canada and Became A Citizen of the Dominican Republic - 26th Aug 16
The GLD vs GOLD - 26th Aug 16
Can Stocks Survive Without Stimulus? - 25th Aug 16
Why Putin Might Be on His Way Out - 25th Aug 16
Bond Guru Gary Shilling - The Bond Market Rally of a Lifetime - 25th Aug 16
A Zombie Financial System, Black Swans and a Gold Share Correction - 25th Aug 16
OPEC’s Output Freeze: What Has Changed Since Doha? - 25th Aug 16
Merkel Prepares For a Deliberate Crisis While White House Plans For a Disastrous Succession - 24th Aug 16
Suspicious Reversal in Gold Price - 23rd Aug 16
If Trump Can’t Pull Off a Victory, Expect a Civil War - 23rd Aug 16
Ceding ICANN and Internet Control to Globalists - 23rd Aug 16
How to Spot an Oversold Stock Market - 23rd Aug 16
Gerald Celente Sees Worst Market Crash, New Military Conflict, Gold Spike to $2,000/oz - 23rd Aug 16
EU Olympics Medals Table Propaganda Includes BrExit Britain - 22nd Aug 16
BrExit Win's Britain Olympics Success Freedom Dividend, Economy Next - 22nd Aug 16
Stock Market Top Forming, but Slowly - 22nd Aug 16
(Really) Alternative Banking Systems - 22nd Aug 16
Vauxhall Zafira Fires - Second Recall Issued - Inspection Before Bursting into Flames? - 21st Aug 16
Will the Stock Market Bubble Pop Regardless if the FED Never Raises Rates? - 21st Aug 16
US Government Spending - 3 Big Stories Not Being Covered – Part III - 21st Aug 16
Silver Analysis - 20th Aug 16
SPX New Highs, Correction Next? - 20th Aug 16
Housing Bubble - The Marginal Buyer Holds The Pin That Pops Every Asset Bubble - 20th Aug 16
Gold Miners Q2 2016 Fundamentals - 19th Aug 16
Which Price Ratio Matters Most in a Fiat Ponzi? - 19th Aug 16
Big Policies, Bigger Failures - 19th Aug 16
Higher Crude Oil’s Prices and USD/CAD - 19th Aug 16
Here’s Why You Should Look for Dividend Stocks and How - 19th Aug 16
Deglobalization Already Underway — 4 Technologies That Will Speed It Up - 19th Aug 16
These 6 Charts Show Why the Average American Is Fed Up - 18th Aug 16
SPX Easing Lower - 18th Aug 16
Low / Negative Interst Rate’s Legacy - 18th Aug 16
The 45th Anniversary of The Most Destructive Event In Modern Monetary History - 18th Aug 16
USDU - An Important Perspective on the US Dollar - 17th Aug 16
SPX Completes Wave 1 Decline - 17th Aug 16
How to Quickly Spot Common Fibonacci Ratios on a Chart - 17th Aug 16
When Does a Forecast Become a Trade? - 17th Aug 16
Kondratiev Wave - The Financial Winter Is Nearing! - 17th Aug 16
Learn "The 4 Best Elliott Waves to Trade -- and How to Trade Them" - 16th Aug 16
Stock Market Bears Turning Bullish At New All Time Highs - Time to Get Worried? - 15th Aug 16
Job Seekers Sacrificed to the Inflation Gods - 15th Aug 16
A Look At Commodities and Financial Markets Trading Week Ahead - 15th Aug 16
Stock Market New Top Forming? - 15th Aug 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

US Economy - 3 Secret Charts

Where Is the Chinese Stock Market Headed?

Stock-Markets / Chinese Stock Market Jan 08, 2016 - 05:39 AM GMT

By: Austin_Galt

Stock-Markets

The Chinese stock market, the SSEC, has tanked out of the block in 2016 and has investment professionals across the globe running around like headless chickens. So, let's take a deep breath and check out the charts. We'll take it from the top beginning with the yearly chart.


SSEC Yearly Chart

Shanghai Composite Index Yearly Chart

We can see a massive bull trend in play with a pattern of higher highs and higher lows.

The 2015 candle shows a bullish candle with a big wick on the upside and that should be at least consolidated. The low for the year was 2850 and price holding above that level keeps the picture very bullish. Breaking that level will likely mean a bigger correction is at hand.

The Bollinger Bands show last year's high at resistance from the upper band and it is certainly possible that price is now headed to the middle band. The middle band stands around 2590 and price breaking below the 2015 low will likely mean price is headed to the middle band at the minimum.

The PSAR indicator is a tight setting and shows price busted resistance last year so a bullish bias is now in force with the dots below price.

I have drawn an uptrend line which is currently around the 2200 mark but I doubt price will trade that low even if price does in fact break to new yearly lows.

The Stochastic indicator is bullish and looks in reasonable shape.

So, the yearly chart is actually quite bullish but a lot depends on the 2015 low holding.

SSEC Monthly Chart

Shanghai Composite Index Monthly Chart

I have added Fibonacci retracement levels of the move up from 2008 low to 2015 high and the low last year clipped the 61.8% level which is a common setup for low. Previously, I was looking for a low down at the 76.4% level at 2494 but as it stands now I am giving the benefit of the doubt to the 2015 low being the final pullback low. Price now looks headed down to test this low and if it doesn't hold then the76.4% level comes back into contention.

I have drawn a Fibonacci Fan from the 2008 low to 2015 high and the low was right around support from the 61.8% angle. Price rallied up to resistance from the 50% angle but is now back down at the 61.8% angle. I favour price nudging back below as it gives the angle a thorough test. If the angle can't hold price then the 76.4% angle becomes the next support.

The Bollinger Bands show price recently trading around the middle band and the current price action looks to my eye as if this move could be a fake out to be followed by an impulsive move back above the middle band. If it is me that is being faked out then price is headed to lower band and new yearly lows.

The moving averages are in bullish formation with the 100ma (red) above the 200ma (black) whiletThe 2015 low was bang on support from the 100ma.

The RSI showed a new high at the 2015 price high which is generally bullish in that final highs often show bearish divergences.

The MACD indicator is bearish although it has generally been trending up since the 2008 low and doesn't look to be in too bad shape.

SSEC Weekly Chart

Shanghai Composite Index Weekly Chart

The RSI is currently in oversold territory while the MACD indicator has just made a bearish crossover. No surprise really given the action this week.

The PSAR indicator has a bearish bias with the dots above price. This is my super loose setting and price reversing back up and taking out that resistance would be very bullish in my opinion.

The Bollinger Bands show price is back at the lower band and I favour a bit more downside to be seen as price pushes deeper into this lower band.

The bearish Fibonacci Fan shows the recent high was right around resistance from the 76.4% angle. Price recovering above this angle would look bullish. Let's wait for signs of price turning back up before getting excited about that.

Assuming a new bull trend is now in play, then the first correction often makes a deep retracement and I have added Fibonacci retracement levels of the move up from 2015 low to recent high. Price now looks headed for the 76.4% level which stands at 3047 but I suspect price may trade even lower and the 88.6% level at 2945 also looks in the mix.

The moving averages are in bullish formation with the 100ma (red) above the 200ma (black) and one scenario is price finding support around the 100ma. This looks to be smack bang in between the 76.4% and 88.6% Fibonacci retracement levels. Hmm.

Summing up, I expect price to trade a bit lower from here whereby I'll be looking for a turn back up above the 2015 low. If price breaks below the 2850 level then I'll expect around another 15% to the downside. Whichever scenario plays out, the massive China bull market that has been in force for 25 years remains solid.

By Austin Galt

www.thevoodooanalyst.com 

Austin Galt is The Voodoo Analyst. I have studied charts for over 20 years and am currently a private trader. Several years ago I worked as a licensed advisor with a well known Australian stock broker. While there was an abundance of fundamental analysts, there seemed to be a dearth of technical analysts. My aim here is to provide my view of technical analysis that is both intriguing and misunderstood by many. I like to refer to it as the black magic of stock market analysis.

Email - info@thevoodooanalyst.com 

My website is www.thevoodooanalyst.com 

© 2016 Copyright  The Voodoo Analyst - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Austin Galt Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife