Chart of the day: Shenzhen shudders
Having almost met our first upside target at 2,245 points, the Shenzhen A-Share Index stumbled and has since slumped through long-term trend-line support and through a thin Ichimoku cloud – all in a day! Monday’s massive sell-off has put it into oversold territory while observed volatility has more than doubled. The index has retraced the Fibonacci 61.8 per cent of last year’s rally in an A, B, C-type correction where the C wave is the same height as A. Price action in January suggests this is the culmination of a bull market clear-out rather than the start of a new bear market. Therefore, we shall be looking for a sudden and sharp bullish reversal candle to form, preferably by the end of the month.
Nicole Elliott is a technical analyst