Shanghai Composite: Snapback Or Touch And Go
Gregory W. Harmon | Dec 25, 2014 07:24AM ET
The Chinese market has been on fire since mid July. And after a 50% move higher it is finally showing some signs that it may at least pause or snapback the way a dragon moves in the parade. The weekly chart below shows the move over 2450 marking a change of character, from a flat basing to an uptrend. But it also shows that the Shanghai Composite bounced lower as it touched the Double Top from April and November 2010.
Oddly, this is also where the 200 week SMA peaked. I wonder if that is significant? What is significant is that we had run up so fast and so far that the momentum indicator RSI had reached extreme levels over 90. A pullback makes sense at this point.
The Chinese market will now get an opportunity to show up how strong it is. A break below 2820 would be a strong sign that it was an overblown move and a retest at 2450 is in the cards. But a hold in the 2900 to 3100 range would give it the time to reset the momentum indicators and continue higher in 2015.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.