HANG SENG, SHANGHAI COMPOSITE – Technical Outlook:
- The Dangle Seng Index may decline additional following a serious technical break down.
- The Shanghai Composite Index is going through some weak point inside the broader vary.
- How way more draw back for the indices and what are the important thing ranges to look at?
HANG SENG INDEX MEDIUM-TERM TECHNICAL OUTLOOK – BEARISH
The Dangle Seng Index (HSI) is testing one more essential assist, a break beneath which may open the door in direction of the Nice Monetary Disaster (GFC) low. Repeated lows in latest weeks and robust downward momentum elevate the prospect of a break beneath in some unspecified time in the future.
HSI is approaching close to key assist on the 2011 low of 16170. This follows a break in September beneath one other key assist on the March 2022 low of 18235, the March 2020 low of 21139, barely beneath the 200-week shifting common. Furthermore, with the Shifting Common Convergence Divergence indicator (MACD) persevering with to be unfavorable on larger timeframe charts (e.g. the month-to-month and quarterly charts), the chance of break beneath 16170 is excessive. When the MACD indicator is beneath zero, it signifies a downtrend, and vice versa.
Dangle Seng Index Month-to-month Chart
Chart Created Utilizing TradingView
Furthermore, the break beneath an uptrend line from 2016 has triggered a serious Head & Shoulders (H&S) sample (the left shoulder is on the 2015 excessive, the top is on the 2018 excessive, and the precise shoulder is on the 2021 excessive), implying a possible transfer in direction of the GFC low of 10676. Like with all technical patterns, measured worth targets are inclined to function guides, reasonably than a rule. Regardless, this highlights the extent of the potential draw back following the assist breaks in latest months.
On the upside, HSI would wish to clear final week’s excessive of 18164 at minimal for the speedy downward stress to fade. Nonetheless, the broader downtrend is unlikely to alter whereas HSI holds beneath the 200-day shifting common (now at about 21105).
SHANGHAI COMPOSITE INDEX SHORT-TERM TECHNICAL OUTLOOK – BEARISH
Like its peer, the Shanghai Composite Index can also be at fairly an necessary crossroad. It’s testing converged assist on the 200-month shifting common and an uptrend line from 2013. Any break beneath the assist may pave manner initially in direction of the March 2020 low of 2647, with stronger assist on the 2019 low of 2441.
Shanghai Composite Index Month-to-month Chart
Chart Created Utilizing TradingView
From a multi-week perspective, the index has maintained a weak tone. Nonetheless, from a multi-month perspective, the index continues to hover in a spread (because the chart exhibits). The higher finish of the vary is the 2018 and the 2021 highs whereas the decrease finish of the vary is the 2019 low. Except the index manages to interrupt beneath 2441, the present spell of weak point is at finest consolidation inside the greater vary. On the upside, on the very least the index wants to interrupt above the August low of 3155 for the short-term downward stress to ease.
— Written by Manish Jaradi, Strategist for DailyFX.com
DailyFX offers foreign exchange information and technical evaluation on the traits that affect the worldwide forex markets.
