SSEC Shanghai Index Daily Chart Fibonacci Retracements Two-Leg Bear Flag

The SSEC has been falling apart but that may change this evening as the Shanghai is minutes away from beginning trading after the shock and awe stimulus announcement (rate cut and triple R cut).  The blue lines show the Fibonacci retracements and they frame the price pivot points nicely. A base at 2360-ish was chosen as the starting point fo rthe parabolic rise in price and this is the target if the two-leg bear flag pattern plays out; a drop down to 2360 would also represent a 100% Fibonacci retracement (the entire rally move higher from October through June is reversed). For the bear flag, leg one is from 5180 to 3420, 1760 points, then sideways consolidation with a slight lift upward, textbook movement, then leg two begins at 4020 so the downside target for leg two is 2260-ish (pink lines).

Once price lost the 200-day MA now at 3666 and the 62% Fib at 3370-ish, price collapsed. In addition to the 0%, 38%, 50%, 62% and 100% Fibonacci levels, lesser known levels are 23.6% and 76.4%. The 76.4% Fib retracement is 2947 and lo and behold price closes yesterday at 2965 exactly at the 76.4% Fib. Price will bounce or die from here.

The MACD line, histogram and ROC are positively diverged wanting a bounce but the RSI and stochastics want to see price come down once more after a bounce occurs. If price bounces, the upside targets are the 62% Fib at 3370-ish and 200-day MA at 3666. Global traders are anxious to see how the Chinese stocks react to the PBOC money bazooka overnight. 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.