SSEC Shanghai China Weekly Chart Falling Wedge Oversold Positive Divergence

The bounce due to the falling wedge, oversold conditions and positive divergence, that we have watched the last couple weeks, occurred. The index is actually up above the critical 2300 line now including today's action, up 4%. China has taken quite a beating, from 3100 to 2100, -32%, in the last ten months. Several months of sideways action would now be prudent. The pink box shows the uber strong trend as price fell. Typically a strong trend like this will need to see some sideways movement to burn off the negative energy before price can move upwards in any substantial way.

The MACD line (purple circles), shows a lower low as price made the recent low so it is the only indicator agreeable to see a matching or lower low in price moving forward. The neon teal circles show that price rebounced up to the 20 week MA before a spank down occurred. Thus, watch the price action now in relation to the 20 MA at 2383. Watch the critical 2300 S/R line as a gauge as well, bulls are happy above, bears are happy below.

Today's China growth number was 8.9%, the lowest growth in 2 1/2 years, but, the consensus estimate was 8.7%, so traders are looking at the glass half full causing the 4% spike today. Markets are already pricing in China easing, such as lowering the bank reserve requirements, and this is evidenced in the huge bounce in copper over the last week as well as other commodites, and the bounce in the SSEC. Thus, when the triple R announcement occurs, likely sometime within the next two weeks, further upside for China may be muted. China is taking a breather now from the multi-month beating. Projection is for price to move sideways thru 2100-2400. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.