SSEC Shanghai China Weekly Chart Sideways Symmetrical Triangle Breakdown Falling Wedge Oversold Positive Divergence

China has been beaten hard. The blue sideways triangle broke down and targets the 1600-1800 range in the future. The downward channel shown by the thin black lines would target those lower numbers in 2012 or 2013, so it looks like China will be hurting for a long time. The 20 wek MA is under the 50 MA, very bearish, and the 200 week MA is sloping negatively, very bearish. Critical support at 2300 needed to hold for the bulls but price collpased thru like a hot knife thru butter.

All that negativity aside, price has now been beaten to oversold levels. A falling wedge and positive divergence across all indicators (pink lines) says price wants to bounce. Price is also at the bottom of that black channel and will want to bounce off the lower rail. The teal box for the ADX shows that the down move is an extremely strong trending down move, thus, after a relief bounce countertrend rally occurs, the downside will begin again.

The critical 2300 was never back kissed after it failed so the projection is for price to bounce here with China receiving a relief bounce, up to 2300, even 2400 is in play to test the top rail of the black channel, then the long term downtrend should resume. A gap fill is needed at 2000 which offers itself as a future target. China will be sick for a long time, likely into 2013, but in this near term time frame it is time for a bounce. This information is for educational and entertainment purposes only. Do not trade based on this information. Consult your financial advisor before making any investment decision.