Shanghai: SSE Composite Index (.SSEC) hinting at further weakness

Shanghai: SSE Composite Index (.SSEC) hinting at further weakness

Shanghai: SSE Composite Index (.SSEC) hinting at further weakness

In Asia, Japan’s Nikkei 225 Index has added 1,100 points since Oct. 29, rising 5.2%. Some analysts have attributed the Nikkei 225 Index’s recent gains to a weakening yen. Analysts at JPMorgan Chase (NYSE:JPM) said that the Index could easily rocket to reach 28,000 points if the USD/JPY currency pair hits 125.

Currently, the USD/JPY currency pair trades just under 114, which suggests that 125 is well within reach if the pair maintains the current bull run.

However, the Nikkei 225 Index is currently pegged at 22,250 points, which means that rallying to 28,000 points from this level will require more than just a strengthening U.S. dollar. The Nikkei lost more than 12% during October and is now in a recovery. The perceived correction on the most recent plunge could be what drives it closer to 25,000 points. Before the decline started on Oct. 2, the Nikkei Index had rallied to trade at 24,270 points, a new multi-decade high. Still, a 28,000 level looks to be a long shot.

Elsewhere in Asia, the Shanghai Composite Index dropped towards the end of last week but is still up 2.23% since Oct. 29, while South Korea’s Hang Seng Index is up 4.13% since Oct. 30, despite dropping more than 3% at the end of last week.

Overall, the bias in prices is: Downwards.

The projected upper bound is: 2,723.81.

The projected lower bound is: 2,468.91.

The projected closing price is: 2,596.36.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 4 falling windows in the last 50 candles–this makes the current falling window even more bearish. The two candles preceding the falling window were black, which makes this pattern even more bearish.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 22.8160. This is not an overbought or oversold reading. The last signal was a sell 1 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 45.37. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 15 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -19. This is not a topping or bottoming area. The last signal was a sell 3 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 11 period(s) ago.

Rex Takasugi – TD Profile

SSE COMPOSITE closed down -36.760 at 2,598.872. Volume was 13% above average (neutral) and Bollinger Bands were 23% narrower than normal.

Open High Low Close Volume___
2,621.2382,621.2382,598.1612,598.87215,244,631,040

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 2,619.63 2,671.55 2,985.74
Volatility: 25 31 25
Volume: 17,501,188,096 13,650,874,368 15,037,147,136

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

SSE COMPOSITE gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
SSE COMPOSITE is currently 13.0% below its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of .SSEC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .SSEC and have had this outlook for the last 3 periods.

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