Shanghai: SSE Composite Index (.SSEC) renewed concern the ongoing trade war will disrupt business operations
China and Hong Kong stocks ended the week on a softer note on Friday, with the mainland’s benchmark capping the worst five straight days of trade in three months, as ZTE and other telecom equipment makers retreated on renewed concern the ongoing trade war will disrupt business operations.
The Shanghai Composite Index fell 0.7 per cent to 2,774.75. The gauge lost 3.3 per cent for the week, its biggest decline for the five-day period since May 10. Hong Kong’s Hang Seng Index dropped 0.7 per cent to 25,939.30, declining for the first time in three days.
The regulator’s effort to bolster market confidence was not helpful, with traders shifting their focus to the trade front again. In an interview with the state-owned Xinhua News Agency, vice-chairman of the China Securities Regulatory Commission, Li Chao, said the impact of the trade dispute should not be played up. He added that China had a rosy growth outlook, low stock valuations and limited leverage.
ZTE, China’s second-largest phone equipment maker after Huawei, sank 7.7 per cent to 27.90 yuan, posting its steepest decline since May 6. The company’s Hong Kong-listed shares slumped 7.8 per cent to HK$20.10. Among other stocks in the sector, Eastcompeace Technology slid 8.1 per cent to 11.30 yuan and Datang Telecom Technology shed 4.7 per cent to 10.13 yuan.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 2,912.20.
The projected upper bound is: 2,856.79.
The projected lower bound is: 2,687.47.
The projected closing price is: 2,772.13.
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 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.
An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend. It then signifies that the momentum may be shifting from the bulls to the bears.
If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with SSE COMPOSITE), it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) 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 29.5003. This is not an overbought or oversold reading. The last signal was a buy 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 30.73. 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 1 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 -98. This is not a topping or bottoming area. The last signal was a buy 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 sell 5 period(s) ago.
Rex Takasugi – TD Profile
SSE COMPOSITE closed down -19.799 at 2,774.753. Volume was 36% below average (neutral) and Bollinger Bands were 4% narrower than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 2,853.95 2,919.22 2,826.44
Volatility: 15 18 26
Volume: 15,986,787,328 18,139,482,112 22,789,787,648
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 1.8% below its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .SSEC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .SSEC and have had this outlook for the last 18 periods.
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