Best of the Week
Most Popular
1.Crude Oil Price Trend Forecast 2016 Implications for Stock Market - Nadeem_Walayat
2.Odds of Winning Walkers Crisps Spell & Go olidays K, C and D Letters - Sami_Walayat
3.Massive Silver Price Rally During The Coming US Dollar Collapse - Hubert_Moolman
4.Pope Francis Calls For Worldwide Communist Government - Jeff_Berwick
5.EU Referendum Opinion Polls Neck and Neck Despite Operation Fear, Support BrExit Campaign - Nadeem_Walayat
6.David Morgan: There Will Soon Be a Run to Gold Like You've Never Seen Before - Mike Gleason
7.British Pound Soars on BrExit Hopes Despite Remain Establishment Fear Mongering - Nadeem_Walayat
8.Gold Price Possible $200 Rally - Bob_Loukas
9.The Federal Reserve is Not Going To Raise Interest Rates and Destroy Gold - Michael_Swanson
10.Silver Miners’ Q1’ 2016 Fundamentals - Zeal_LLC
Free Silver
Last 7 days
Operation Black Vote BrExit Warning for the Wrong EU Referendum - 27th May 16
UK Immigration Crisis Hits New Extreme, Catastrophic ONS Migration Stats Ahead of EU Referendum - 27th May 16
Many of the World’s Best Investors Made Their Fortunes This Way…And You Can Too - 27th May 16
The Ugly Truth About Stock Market Manipulation and Gold Prices - 27th May 16
Gold Price Looking Vulnerable While Gold Stocks Correct - 27th May 16
The 5 Fatal Flaws of Trading - 27th May 16
The Next Big Crash Of The U.S. Economy Is Coming, Here’s Why - 27th May 16
A New Golden Bull or Has the Market Gone Too Far Too Fast? - 27th May 16
It Feels Like Inflation - 26th May 16
Negative Interest Rates Set to Propel the Dow Jones to the Stratosphere? - 26th May 16
S&P Significant Low has Occurred – Not Likely! - 26th May 16
Statistics for Funeral Planning in UK Grave - 26th May 16
Think Beyond Oil And Gold: Interview With Mike 'Mish' Shedlock - 26th May 16
Hard Times and False Mainstream Media Narratives - 26th May 16
Will The Swiss Guarantee 75,000 CHF For Every Family? - 26th May 16
Is There A Stocks Bear Market in Progress? - 26th May 16
Billionaires Are Wrong on Gold - 26th May 16
How NOT to Invest in the Gold Market - 26th May 16
The Black Swan Spotter...Which Saw the Oil-Crash coming; now says the “Invisible Hand” will push Brent to $85 by Christmas - 26th May 16
U.S. Household Debt Still Below 2008 Peak - 25th May 16
Brexit: Wrong Discussion, Wrong People, Wrong Arguments - 25th May 16
SPX is at Strong Resistance - 25th May 16
US Dollar, Back From the Grave? - 25th May 16
Gold : Just the Facts Ma’am - 25th May 16
The Worst Urban Crisis in History Could be Upon Us - 24th May 16
Death Crosses Across The Board Are IRREFUTABLE Stock Market Sell Signals - 24th May 16
Bitcoin Trading Alert: Bitcoin Price Stays below $450 - 24th May 16
Stock Market Crash Death Cross Doom Prevails - 23rd May 16
Did AMAT Chirp? Implications for the Economy and Gold - 23rd May 16
Stocks Extended Their Rebound On Friday - Will They Continue Higher? - 23rd May 16
UK Treasury Propaganda Warns of 3.6% Brexit Recession, the £64 Billion Question? - 23rd May 16
Stock Market Support Breached, But Not Broken! - 23rd May 16
George Osborne Warns of 18% Cheaper House Prices - BrExit for First Time Buyers - 22nd May 16
Gold Bull-Phase I Continues to Confound (The Trek to “Known Values”) - 22nd May 16 r
Avoiding a War in Space - 22nd May 16
Will Venezuela Be Forced to Embrace the US Dollar? - 21st May 16
Danish Central Bank Stumbles with Its Currency Peg to the Euro - 21st May 16
SPX Downtrend Underway - 21st May 16
George Osborne Warns of More Affordable UK Housing Market if BrExit Happens - 21st May 16
Gold And Silver 11th Hour: Globalists 10 v People 0 - 21st May 16
David Morgan: There Will Soon Be a Run to Gold Like You've Never Seen Before - 21st May 16
Gold Stocks Following Bull Analogs - 20th May 16
The Gold Chart That Has Central Banks Extremely Worried - 20th May 16
Silver Miners’ Q1’ 2016 Fundamentals - 20th May 16
Stock Market Rally At the End of the Road? - 20th May 16
British Pound Soars on BrExit Hopes Despite Remain Establishment Fear Mongering - 20th May 16
NASDAQ 100, FTSE, and British Pound - When Rare Market Data Screams, Listen  - 20th May 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Why 95% of Traders Fail

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