China market (2010-10-28 SSEC analysis)

The sudden slump in HSI was really unpredictable. We might say that it might be due to QE2 by US, but it doesn't need a reason for big jumps or falls anyway. Nevertheless, it was China market which led the HSI upwards, and yesterday it was again China market which pulled HSI down. So I did analysis on the chart of Shanghai Stock Exchange Composite Index (SSEC).



Above is the daily chart of SSEC, we could clearly found the rapid and crazy surge in Early October with an increased trading volume. In these few days, the index was moving in a narrow uptrend channel. Although it plunged greatly yesterday, the index managed to close above the 10-day SMA and within the channel. The condition does not look too bad, at least until this moment.

If SSEC could go back upwards, the resistance level is at around 3100, and then 3200 which is the peak level in April 2010.

If SSEC breaks down, then it would be a nightmare as there is no support level until 2700. So keep track of SSEC rather than focusing on the Hong Kong market.