Yes, the Shanghai Composite had a massive Gap Down after a two week Chinese New Year break due to the COVID-19 (SARS-CoV-2) outbreak in Wuhan, Hubei, China. Since then, week after week it made momentous recovery up to close the gap this week. While this is seemingly bullish, and is technically starting to pull the MACD bullish, I call a bluff. Here is why...
1. The system Sell signal has not been invalidated. Invalidation requires a break out of the long term trend line, with continued momentum (in the face of bearish looking Asian markets). 2. The current range expected is very large with a widening triangle
With a slight probability advantage, I call a bluff on the Shanghai Composite, to be rejected at the trend line, and close the next week or two below 2975.
I'd be careful "believing" in the reversal here on the SHCOMP until the virus is totally contained. What you are seeing here is essentially a totally fake gap reversal because Mainland China has banned short selling and net selling as well as dumping trillions of liquidity into their market; the only thing people can sell are essentially small positions worth 1M yuan (<150K USD) which is overall peanuts compared to the liquidity.
Their bans can't last forever unless they want 20-30% inflation.
People on CNBC and other mainstream media outlets are confusing this SHCOMP reversal to somehow a bullish reversal and that the virus is 'over' or 'ending'. In reality, the reason for the gap fill are far from positive and only as such because its a communist nation.
Their bans can't last forever unless they want 20-30% inflation.
People on CNBC and other mainstream media outlets are confusing this SHCOMP reversal to somehow a bullish reversal and that the virus is 'over' or 'ending'. In reality, the reason for the gap fill are far from positive and only as such because its a communist nation.
- zSplit