Shanghai: SSE Composite Index (.SSEC) investors assess China central bank’s move to cut banks’ reserve requirements
Shares in Asia stumbled on Monday in morning session as investors assess China central bank’s move to cut banks’ reserve requirements in a bid to support growth.
The Shanghai Composite Index fell 2.19% in morning session after the bourse reopened following a week-long holiday. In Hong Kong, the Hang Seng erased early gains to trade flat.
Investors will be mainly reacting to a decision on Sunday by the People’s Bank of China to cut the level of cash that banks must hold as reserves in a bid to lower financing costs and spur growth.
Following the PBOC’s move, the offshore yuan was 0.2% weaker against the dollar in early trade on Monday.
In the US, non-farm payrolls on Friday showed job creation slowed in September, likely from Hurricane Florence’s impact on restaurant and retail payrolls. However, the Labour Department report showed a rise in wages that could keep the Federal Reserve on track for more interest rate hikes.
In currency markets, the dollar was 0.07% stronger against the yen at 113.78, while the euro was 0.05 stronger against the dollar at $1.1528.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 2,817.70.
The projected lower bound is: 2,610.81.
The projected closing price is: 2,714.26.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 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 3 falling windows in the last 50 candles–this makes the current falling window even more bearish.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 53.5092. This is not an overbought or oversold reading. The last signal was a sell 0 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 46.62. 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 59 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 8. This is not a topping or bottoming area. The last signal was a sell 0 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 8 period(s) ago.
Rex Takasugi – TD Profile
SSE COMPOSITE closed down -104.840 at 2,716.510. Volume was 17% above average (neutral) and Bollinger Bands were 10% narrower than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 2,752.69 2,756.66 3,071.90
Volatility: 32 24 22
Volume: 12,743,017,472 12,550,788,096 15,011,699,712
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.
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 11.6% below its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. 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 6 periods.