SSE Composite Index WCA - Classic Rectangle

SSE:000001   SSE Composite Index

Hello and thank you for taking the time to read my post. Today, we analyze the SSE Composite Index on the weekly scale, focusing on a classic price pattern called the "Rectangle Pattern." The SSE Composite Index is the most important stock index in China, excluding Hong Kong. It is a price index weighted by market capitalization and includes all public companies listed on the Shanghai Stock Exchange. The index is published by the China Securities Index Company. Analyzing an index helps enormously with top-down approaches, as it provides a broader perspective of the market and allows investors to gauge the overall sentiment before diving into individual stocks.

Rectangle Pattern:

The rectangle pattern is a chart pattern formed when the price of an asset moves between two parallel horizontal lines—representing support and resistance levels—over a period of time. In essence, it reflects a consolidation phase where the market is undecided about the direction of the trend.

Remember, this is just a brief introduction to the technical aspects of the rectangle pattern. As you delve deeper into this topic, you'll discover more nuances and practical applications that can enhance your trading strategies.

Additional Analysis:

On the SSE Composite Index chart, we can observe some fascinating insights. The general trend was downward until 25/04/2022, which changed with the formation of a hammer. Since then, the price has been bound within a range, which is depicted as a classic rectangle pattern. This pattern has been forming for 423 days, which is notable because the longer a pattern remains consistent, the higher the probability that the subsequent breakout will be volatile.

The support of the range is at 2890, while the resistance is at 3400. Currently, the price is above the 200 EMA, making a long entry more attractive. We will closely monitor the price pattern and wait for a break above 3400 while examining the sectors or stocks from the SSE Composite Index more closely. The next potential resistance after 3400 would be 3720.

Top-Down Approach Significance:

A top-down approach is a method that investors use to analyze the market, beginning with a broad overview and then narrowing down to individual stocks. This method helps investors identify the overall market sentiment and trends, allowing them to make more informed decisions when selecting stocks within specific sectors or industries. Analyzing the SSE Composite Index, as shown in this post, provides a valuable starting point for investors looking to employ a top-down approach in their decision-making process.


The SSE Composite Index weekly chart showcases a classic Rectangle Pattern, reflecting a consolidation phase in the market. By closely monitoring the support and resistance levels, as well as the general trend, traders can be better prepared for any potential price action in the future. Utilizing a top-down approach enables investors to gain a broader perspective and make more informed decisions when selecting stocks. As always, it's essential to consider risk management and proper position sizing when trading based on chart patterns.

Please note that this analysis is not financial advice. Always do your own due diligence when investing or trading.

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Best regards,

Karim Subhieh


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