The Shanghai stock index has moved to “Warning” phase since 14 August 2009. It broke its 50 day moving average with ease on 14 August. The subsequent rebound from 2800 level met with strong resistance at the 3000 level.
It seems that the Chinese government is trying to prevent a new stock market bubble from forming. However, it does seem that the Chinese government also does not want the market to drop too much.
Nevertheless, weakness is beginning to show on the charts. The index has traded in “Warning” phase for 11 trading days now.
The next support level is at 2800 level. If the index breaks through this level, it will complete a lower high and lower low pattern. This will mean a possibility for the index to test its 200 day moving average.
It seems that the Chinese government is trying to prevent a new stock market bubble from forming. However, it does seem that the Chinese government also does not want the market to drop too much.
Nevertheless, weakness is beginning to show on the charts. The index has traded in “Warning” phase for 11 trading days now.
The next support level is at 2800 level. If the index breaks through this level, it will complete a lower high and lower low pattern. This will mean a possibility for the index to test its 200 day moving average.
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