Shanghai: SSE Composite Index (.SSEC) move lower could end this year’s bull market
Just 34 points stand between a recovery in China’s stocks and the end of the bull market, according to chart watchers.
The Shanghai Composite Index has twice tested the upper band of a key support channel this month in intraday trading, at 2,838 points, before bouncing back by the close. That gap was formed by the difference between the gauge’s closing level on Feb. 22 and its opening price on Feb. 25, the following session. Its 5.6% rally that day was the biggest since 2015.
The key question for technical analysts is whether the index will fail to hold above the support level, and close below the lower band of the gap at 2,804 points. That would be a bearish sign for an index that’s already lost 12% since its April peak. Some say the gauge would then head toward this year’s intraday low set in January, implying another 15% slump from Monday’s close.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
The projected upper bound is: 3,055.04.
The projected lower bound is: 2,749.06.
The projected closing price is: 2,902.05.
A white body occurred (because prices closed higher than they opened).
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 26 white candles and 24 black candles for a net of 2 white candles.
An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend (which appears to be the case with SSE COMPOSITE). It then signifies that the momentum may be shifting from the bears to the bulls.
If the engulfing bullish pattern occurs during an uptrend, it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.
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 34.0382. This is not an overbought or oversold reading. The last signal was a sell 2 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 40.83. 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 7 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 -47. This is not a topping or bottoming area. The last signal was a buy 7 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 sell 24 period(s) ago.
Rex Takasugi – TD Profile
SSE COMPOSITE closed up 35.364 at 2,905.969. Volume was 29% below average (neutral) and Bollinger Bands were 64% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 2,902.45 3,075.79 2,776.26
Volatility: 31 32 28
Volume: 23,003,203,584 34,418,098,176 21,180,672,000
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 is currently 4.7% above its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume out of .SSEC (mildly bearish). Our trend forecasting oscillators are currently bearish on .SSEC and have had this outlook for the last 15 periods.
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