Friday, August 22, 2014

Shanghai Stock Exchange Composite Index (SHCOMP) outperforms S&P and Hang Seng Indexes to test the key resistance


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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