Chart of the day: Bearish sentiment prevails
Last Wednesday, volume on China’s futures exchange, where a large Marabuzo candle formed on the chart of the CSI 300 Index contract, was good, underlining the sudden jolt among investors. It also highlights the importance of resistance between 3,175 and 3,295 points that has capped since January. Though moving averages are still bullish, momentum has turned down and the MACD is clearly bearish. Therefore, we shall allow for another slow drift down to interim support around the psychological support area at 3,000 points. However, keep in mind that key support lies another notch lower, between 2,700 and 2,800 points – the lows in August last year, January, February and early June this year – and a drop towards here cannot be ruled out.
Nicole Elliott is a technical analyst