Chart of the day: Shenzhen A shares slump
In October, the Shenzhen A-Share Index disappointed, stuck under resistance at around 2,130 points; In November, it surprised by collapsing through cloud support, yet then got back onto a more even keel in December. Once again, we have been shocked by the latest slump, the biggest bloodbath since January 2016. But rather than throwing our hands up in despair, we are looking for signs of basing in what we see as an A, B, C-type correction lower where the C leg has dropped by nearly as much as the A wave. Previous lows, Fibonacci retracements and a long-term trend line provide a cluster of support levels between 1,800 and 1,900 points, so now watch the weekly candles. We would review if it drops below 1,675 points.
Nicole Elliott is a technical analyst