The
top panel is the relative strength chart of SHCOMP index v.s. SPX index (green
line) and SHCOMP index v.s. HSI (Hang Seng index) (white line). The 50 week
moving average of SHCOMP/SPX (pink line) has been capping the decline since the
beginning of 2010. The latest push from SHCOMP is probing the pink line again.
It needs to decisively break above the key moving average ceiling to suggest basing and
offer scope for long-term trend change and further outperformance of SHCOMP
index relative to SPX.
The
lower panel is the SHCOMP index price chart. The 200 week moving average (blue
line) has been capping the decline since April 2010. If the index continues
this year’s rally to break above the 2350 area (where 200 week MA is), that would
confirm an 18-month base and suggest sustained strength ahead towards the
triangle breakout target at 2620.
Trading bias:
Buy on dips
Shanghai Stock Exchange Composite Index (SHCOMP) Relative Strength and Price Weekly Chart
SHCOMP Index Weekly Chart for Triangle Breakout Target
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