Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19
Boris Johnson's "Do or Die, Dead in a Ditch" Brexit Strategy - 11th Sep 19
Precious Metals, US Dollar: How It All Relates – Part I - 11th Sep 19
Bank of England’s Carney Delivers Dollar Shocker at Jackson Hole meeting - 11th Sep 19
Gold and Silver Wounded Animals, Indeed - 11th Sep 19
Boris Johnson a Crippled Prime Minister - 11th Sep 19
Gold Significant Correction Has Started - 11th Sep 19
Reasons To Follow Experienced Traders In Automated Trading - 11th Sep 19
Silver's Sharp Reaction Back - 11th Sep 19
2020 Will Be the Most Volatile Market Year in History - 11th Sep 19
Westminister BrExit Extreme Chaos Puts Britain into a Pre-Civil War State - 10th Sep 19
Gold to Correct as Stocks Rally - 10th Sep 19
Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - 10th Sep 19
Stock Market Sector Rotation Giving Mixed Signals About The Future - 10th Sep 19
The Online Gaming Industry is Going Up - 10th Sep 19
The Unknown Tech Stock Transforming The Internet - 10th Sep 19
More Wall Street Propaganda - 10th Sep 19
Stock Market Price Structure Still Suggests We Are Within Volatile Rotation - 9th Sep 19
Stock Market Still Treading Water - 9th Sep 19
Buying Pullbacks in Silver & Gold - 9th Sep 19
Government Spending - The High Price of a "Free Lunch" - 9th Sep 19
Don't Worry About a Recession - 9th Sep 19
Large Drop in Stocks, Big Rally in Gold and Silver - 9th Sep 19
US Stock Market Hasn’t Cleared The Storm Yet - 8th Sep 19
Precious Metals Were Ripe for a Pullback - 8th Sep 19
Market Chart Patterns to Spot High-Confidence Trading Opportunities in a "Pinch"! - 8th Sep 19
Five Feet High And Rising - Stock Market Bulls False Sense of Security - 8th Sep 19

Market Oracle FREE Newsletter

The No1 Tech Stock for 2019

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