In the short term daily, Shanghai Composite Index has broken couple of support levels ( trendline and price support around 3350) and now testing the prior breakout level as well as the significant bar of the prior breakout. These significant bars more often than not gets tested.
50 period SMA also violated but the long term 200 period SMA hasn’t had any tests yet. I suspect it may. What is interesting is that the current value of the 200 period SMA as well as the low of the BREAKOUT BAR (being the prior breakout level) are in the same vicinity. This makes that level (3250 – 3300), support zone to watch going forward.
RSI at the bottom window is now at sub 40 (36.30). This is below bull territory lower threshold level of 40.
Why bother one may ask with Shanghai ? Because we ( XAO) have a positive correlation in the short term ( daily over a 20 day period) with Shanghai. Will XAO follow suit and break the most recent price support level @ 6000 remains to be seen off course ? Another matter/analysis.
Back to Shanghai now. I am watching this significant support level of 3250 – 3300 over the days/weeks ahead which is likely to be tested.
Chart is courtesy of StockCharts.com
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