SSEC Shanghai Index China Weekly Chart Sideways Channel

The SSEC has exploded higher in recent weeks causing traders to chase the latest shiny object. The blue sideways symmetrical triangle has 180 points as the vertical side so the upside target after the breakout at 2055 is 2235; bingo. So the triangle pattern is satisfied. Price is at the top rail of the longer term sideways channel through 1980-2260. Many traders are proclaiming the all-clear for China but may be disappointed as the weeks play out.

SSEC is moving sideways without an up or down trend through 2013 into 2014. The pink standard deviation lines squeezed in for a big move which resolved upwards two months ago. Since the central banker money has to flow somewhere, and SSEC had been beaten down in a malaise, and the PBOC (China's Central Bank) keeps adding stimulus as well, the tight band squeeze sends price higher. The indicators are long and strong except for the ROC. The stochastics are overbot at high levels with very little further space higher available. The RSI squeezes out a higher high than the early 2013 high which is bullish that will want to see a higher high in price going forward.

On the bear side, price has seriously violated the upper band so a move back to the middle band at 2089 is on the table as well as the lower band at 1937. The 1937 is under the lower line of the long-term sideways channel. The SSEC still has upside strength available but the move should be more sideways to sideways up rather than parabolic like July. The projection would be for price to top out in the 2250-2300 area, in the vicinity of the upper channel line, say over the next month but will then roll over again and return to the long-term channel targeting the 2090-2140 area as an initial downside target. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 9/2/14: The SSEC pops +1.4% today up to 2266 within the 2250-2300 area.