Shanghai Index- Hottest Index Creates Reversal Pattern, Breaks Support

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The Shanghai Stock Market has been the hottest of the hot over the past year, up over 110%, which dwarfs the returns of the S&P 500 (SPY) and Germany’s DAX index (DAX).

The rally over the past year put the Shanghai index at its 61% retracement level based upon the 2007 highs and 2008 lows.

As the index was hitting this Fibonacci extension level, it created a reversal pattern (wick) last week. As it was hitting this Fibonacci resistance level, momentum was reaching overbought levels only seen at the 2007 highs.

The index remains inside of a steep rising channel and this week is breaking a steep support line at (1).

Humbly, I remain of the opinion its important to keep a close eye on leadership. If the Shanghai index cools off, it could impact numerous global markets!

 

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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