Chart of the day: ChiNext index out of kilter

Unlike other Chinese stock indices which saw strong starts to 2018, the index of shares of the ChiNext Growth Enterprise Board crumbled. Once again resistance from the falling Ichimoku cloud is to blame, potentially turning moving averages to bearish. Interestingly, the trend to lower prices, which started after the National Day holiday, has been on steadily declining volume suggesting reluctant sellers and a waning bear move. Because we are also close to last year’s low, in turn the lowest point in three years, this might be a buying opportunity. We will watch the candles closely to spot basing activity, preferably something short, sharp and dramatic like a hammer or a gap and island reversal.

Nicole Elliott is a technical analyst