Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21
Gold Price Big Picture Trend Forecast 2021 - 13th Jan 21
Are Covid Lockdowns Bullish or Bearish for Stocks? FTSE 100 in Focus - 13th Jan 21
CONgress "Insurrection" Is Just the Latest False Flag Event from the Globalists - 13th Jan 21
Reflation Trade Heating Up - 13th Jan 21
The Most Important Oil Find Of The Next Decade Could Be Here - 13th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

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

© 2005-2019 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

6 Critical Money Making Rules