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Friday, April 16, 2010

Stock Index Chart Patterns - Shanghai Composite, Jakarta Composite, Hang Seng - Apr 16, '10

Shanghai Composite index chart


The Shanghai Composite index chart pattern consolidated sideways in a very narrow range during the week, managing to stay above the 3100 level but closing 15 points lower on a weekly basis.

All the three EMAs are moving up slowly, with the index above them. The bulls are trying to wrest control away from the bears, but not with great success so far.

The slow stochastic is at the edge of the overbought zone. The MACD is positive and just above the signal line. The ROC is positive though unable to move up much. The RSI dropped after touching the overbought zone, but remains above the 50% level.

The index is trying to move up, but the bulls will require a lot more effort to take the index past the previous Jan '10 top of 3307.

Hang Seng index chart


The Hang Seng index chart spent the first four days of the week comfortably above the 22000 level. Just when it looked like the bulls will be able to push the index beyond the Jan '10 top of 22672, the bears struck back on Friday. A near 300 points tumble took the Hang Seng below the 22000 mark and a lower weekly close.

All three EMAs are still moving up, and the technical indicators are all showing bullishness. The slow stochastic is in the overbought zone. The MACD is positive and above the signal line. The ROC is also positive. The RSI dipped a bit after touching the overbought zone.

The Hang Seng index is at the same level that it was in Oct '09 - making zero progress in 6 months.

Jakarta Composite index chart


When I checked the Jakarta Composite index 4 weeks back, it had just hit a new high and was looking overbought. Since then, the bulls have been on a roll as the index rallied strongly and made higher tops and bottoms. On Apr 7 '10, it made another new high of 2916.

But have a look at the ROC and RSI indicators - both made lower tops as the index made the new high. For the past month, these two indicators have been making lower tops and bottoms. The negative divergence is likely to take its toll soon.

All the three EMAs are moving up nicely. The slow stochastic is in the overbought zone. The MACD is positive and touching the signal line. In spite of the negative divergences, the ROC is positive and the RSI is above the 50% level.

Bottomline? The Asian index chart patterns are looking bullish but facing some headwinds. It remains to be seen if we are at the beginning of a period of correction, or experiencing a short blip in a long bull rally. Stay invested with trailing stop-losses.

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