Chart Book

Chart of the day: ChiNext collapses

PUBLISHED : Sunday, 22 January, 2017, 9:10pm
UPDATED : Sunday, 22 January, 2017, 9:40pm

This chart screams of extremes and, having exceeded our downside target at 2,425 points, the ChiNext index closed above this level on Friday. This suggests that we have seen an extension to an A, B, C-type correction (which put the index at its most oversold level ever and where the size of C equals A’s), with the move ending with a weekly hammer candle against long-term trend-line support and Fibonacci retracement at 76.4 per cent. Volume picked up last week and observed volatility tripled, but both remained well below the record levels seen in 2015 and last year. Therefore, despite a death cross on the 50- and 200-day moving averages, we expect a rally back up to the 2,620-point area and maybe more over the long term.

Nicole Elliott is a technical analyst