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Thursday, March 28, 2024

Shanghai Index- Hottest index creates reversal pattern, breaks support!

Courtesy of Chris Kimble.

shanghaireversalwickfib61levelapr5CLICK ON CHART TO ENLARGE

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 and Germany’s DAX index.

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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