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Friday, February 12, 2010

Stock Index Chart Patterns - Shanghai Composite, Hang Seng, Korea KOSPI - Feb 12, '10

Shanghai Composite index chart


Almost a sense of deja vu when one looks at the chart pattern of the Shanghai Composite index. The index dipped below the 200 day EMA once again, only to move back up. The week-on-week difference being the close above the long-term moving average today.

The bulls may enjoy a more relaxed weekend with the technical indicators showing marginal improvements. The slow stochastic is trying to keep its nose above the oversold zone. The RSI has bounced off its oversold zone. The MACD has moved up just a bit and is touching the signal line, but remains in negative territory. The ROC is also in negative territory but has moved up smartly towards the '0' line.

The 20 day EMA has dropped well below the falling 50 day EMA, and is threatening to go below the 200 day EMA. A minor fight back by the bulls have prevented a complete rout. The bears still have the upper hand.

Hang Seng index chart


Another attempt at a recovery after a deeper drop below the 200 day EMA by the Hang Seng index chart was again resisted by the falling 20 day EMA. Note the falling volumes during the pull back attempt, indicating little follow-through buying.

The technical indicators look similar to those of the Shanghai Composite index. The slow stochastic has edged above the oversold zone. The RSI has bounced off the oversold zone. The ROC has moved up to touch the '0' line. The MACD is in negative territory and touching the signal line.

The bearish pattern of lower tops and lower bottoms continue. Bulls will need to make a stronger effort to get the index out of the rut.

KOSPI (Korea) index chart


During the previous look at the Korea KOSPI index chart three weeks back, the following comments were made:

'Bears need not lose hope. The MACD has remained pretty flat for three weeks while the index rose to make a high of 1723 on Jan 19 and 20, '10. That is the exact same level hit on Sep 23, '09. That makes a very good case for a bearish 'double-top' pattern.'

The 'double top' bearish pattern in Sep '09 and Jan '10 was followed by a swift correction down to the 200 day EMA on high volumes. A nice bounce up from the long-term moving average got resisted by the long-term support-resistance level of 1600. A copy-book technical analysis example.

The technical analysis indicators are looking weak, even as the index remains above the 200 day EMA. The slow stochastic is inside the oversold zone. The MACD is below the signal line in negative territory. The ROC is still negative, but trying to move up quickly. The RSI is just above its oversold zone.

Bottomline? The chart patterns of the Asian indices show only a minor respite from a strong bear attack. Any signs of a pull back can be selling opportunities. Wait for lower levels to enter.

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