Chart of the day: Dramatic swings in Shenzhen stocks
Since early October, the Shenzhen A-Share Index has struggled with resistance at around 2,130 points, which is something of a surprise. On Friday, it sliced right down through what is a strong, deep, bullish daily Ichimoku cloud – another jolt to our outlook. Monday’s price action, opening at the bottom, horizontal edge of the cloud and slumping well below that, only to reverse later in the day to close well above the opening price, marked a reversal. The candle forms a dramatic version of a hammer, where price action often marks an important interim low. If we can hold above the cloud, we expect the market to recover and eventually break above 2,130 points to reach 2,230 possibly before the end of the year.
Nicole Elliott is a technical analyst