Friday, March 26, 2010

Stock Index Chart Patterns - Shanghai Composite, Taiwan TSEC, Hang Seng - Mar 26, '10

Shanghai Composite index chart


The chart pattern of the Shanghai Composite index shows another week of inconclusive struggle as the bulls failed to clear the resistance of the 50 day EMA and the bears were unable to break the support of the 200 day EMA.

The indecisiveness is evident from the three EMAs. The 20 day EMA is moving sideways. So is the 200 day EMA. The 50 day EMA is still falling but looks like it is flattening out.

The slow stochastic moved above the 50% level but wants to head down. The MACD is marginally negative and touching the signal line. The ROC has dropped into the negative zone. The RSI has edged above the 50% level.

The index ended about 8 points lower on a weekly basis, but closed above the 3000 level on all 5 days. Expect more sideways consolidation to continue before this fight finally gets resolved. The bears seem to be ahead on points.

Hang Seng index chart


Last week, I had mentioned about the significance of the level of 21441 in the Hang Seng index chart pattern, which was touched twice before the index retreated and closed lower. This week the index didn't even come close to the 61.8% Fibonacci retracement level of the entire bear market fall.

The Hang Seng index closed below the psychological level of 21000 thrice during the week before today's up move helped it to close the week at 21053 - more than 300 points lower on a weekly basis.

The technical indicators have turned weaker. The 20 day EMA remained merged with the 50 day EMA almost exactly at the 21000 level. The 200 day EMA is almost flat.

The slow stochastic dropped from the overbought zone to the 50% level. The MACD is positive but falling and just hanging on to the signal line. The ROC has dipped into the negative zone. Only the RSI is showing some strength as it bounced off the 50% level.

Taiwan (TSEC) index chart


Four weeks ago, the Taiwan (TSEC) index chart pattern was looking quite weak as the bears had a firm grip on the situation. The bulls have staged a decent recovery with a higher-tops higher-bottom bullish pattern. The resistance from the 7500 level has been cleared convincingly, but the TSEC is still more than 500 points below its Jan '10 high of 8395 and closed lower on a weekly basis.

The TSEC technical indicators look much stronger than those of its mainland counterparts. The slow stochastic is in the overbought zone. The MACD is positive and above the signal line. The ROC has managed to remain positive. The RSI twice reacted from the overbought zone but is heading up again.

Bottomline? The chart patterns of the Asian indices are still fighting hard to fend off the bears. The Jan '10 highs remain tough hurdles. Stay invested with strict stop-losses. Buying should start only when volumes pick up during up moves.

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