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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
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Wednesday, July 08, 2015

China's Shanghai Index: The Falling Knife

* See UPDATES below...

Further to my post of June 8th, here's what has happened, since then, on China's Shanghai Index.

After making a slightly higher high of 5178.19 on June 11th, it has since plunged to a low today (July 8th) of 3421.53 to close at 3507.19...slightly above its 200 Day Moving Average -- making a loss of 1671 points from high to close, thus far.

The first level of major supports sits around 3000...the next around 2500...a solid break and hold below 2000 could cause major panic in markets around the world.

So far, attempts by the Chinese Central Bank to intervene and stop this falling knife have failed...we'll see if this market can find any stability at any of the above-noted levels. There are no "buy" signals at this time on the RSI, MACD, and Stochastics indicators -- rather, they are still bearish, although quite oversold; however, the extreme bearish force of the MACD, in particular, should be respected, as we could, very well, see much more selling in the short term.

* UPDATE July 27, 2015:

* UPDATE August 25, 2015:

Major support now sits in between 2750 and 2500, as price has closed below 3000 today -- now major resistance.

* UPDATE September 7, 2015:

China's Shanghai Index is about to experience a bearish moving average Death Cross...likely by tomorrow's or Wednesday's close. The RSI and PMO indicators are indicating further weakness to come.

At the moment, price (after bouncing back from its price noted in my above UPDATE) is trading at just above the major support level of 3000...a drop and hold below could, very well, see price falling back to somewhere in between 2750 and 2500, or 2000, or even lower. If price holds above 3000, we may see price rally to retest the Death Cross around 3700, before we see further weakness and lower swing lows...however, failure to close the gap below 3500 would likely spell major trouble for this index and see price plunge rather quickly to new lows for 2015.

* UPDATE September 8, 2015:

Bearish moving average Death Cross formed today...yesterday's comments (noted above) apply...