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The original analysis of CK:
Analysis of Shanghai Composite Index – 24 Jul 09
Though Shanghai Composite Index has been charging up, there is little sign that the trend is coming to an end. The probability of a trend reversal remains remote. Short term retracement however, is more likely. This is healthy so as to avoid a collapse in the trend. Several evidences lend credence to this argument.
13 and 26 SMA plotted on the index shows clearly that the uptrend is well established. 13 and 26 SMA represent medium term trend. The separation between these 2 moving averages is well spaced. The “daylight” has increased somewhat over the last few sessions but it is still too early to conclude that the trend has run its course. (“Daylight” refers to the low of the bar to the moving average). The gradual increase of the daylights shows that the trend is increasing in strength. Overhead resistance is at 3650.
ADX is also rising with DIs positively placed. This suggests that the trend is strong. ADX value is at 42 on the close on 24 Jul 09. Though high, it is not extreme. ADX has not rallied above both directional lines, so there is no sign that a bubble is in the making.
200 SMA, which flattened in early June, has since been rising. This shows that the long term uptrend remains intact.
However, there are bearish divergence signals in RSI. This indicates the likelihood of a short term pull back. Support is at 3250. Temporary retreat to a well-established trend would provide evidence for subsequent trend continuation.
Analysis of Shanghai Composite Index – 24 Jul 09
Though Shanghai Composite Index has been charging up, there is little sign that the trend is coming to an end. The probability of a trend reversal remains remote. Short term retracement however, is more likely. This is healthy so as to avoid a collapse in the trend. Several evidences lend credence to this argument.
13 and 26 SMA plotted on the index shows clearly that the uptrend is well established. 13 and 26 SMA represent medium term trend. The separation between these 2 moving averages is well spaced. The “daylight” has increased somewhat over the last few sessions but it is still too early to conclude that the trend has run its course. (“Daylight” refers to the low of the bar to the moving average). The gradual increase of the daylights shows that the trend is increasing in strength. Overhead resistance is at 3650.
ADX is also rising with DIs positively placed. This suggests that the trend is strong. ADX value is at 42 on the close on 24 Jul 09. Though high, it is not extreme. ADX has not rallied above both directional lines, so there is no sign that a bubble is in the making.
200 SMA, which flattened in early June, has since been rising. This shows that the long term uptrend remains intact.
However, there are bearish divergence signals in RSI. This indicates the likelihood of a short term pull back. Support is at 3250. Temporary retreat to a well-established trend would provide evidence for subsequent trend continuation.
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