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The Shanghai Index Presents a Classic Technical Pattern
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The Shanghai Index Presents a Classic Technical PatternRecent price action from Shanghai’s index has concerned investors lately, speculating that the enormous drop will weigh on the global markets, dragging them lower. Despite that fact the major indices, including the S&P500, FTSE and the DAX have all increased, reaching new highs. The S&P500 climbed last week by 2.59%, while the DAX soared to new highs, climbing by 4.45%.
Last week’s economic releases reassured investors that not all might be lost as the Chinese government released better than expected news on production and retail sales. Output for the month of July increased 12.6% in China compared to a 10.6% increase for the month of June. When taking a glance at the following chart released by China’s National Bureau of Statistics one can see that the overall output has increased dramatically since the start of the year.
Furthermore, retail sales in China increased 15.6% for the month of July.
From a technical point of view, the Shanghai Index increased 4.8% for the week, bouncing off its 200 weekly moving average. When taking a closer look at the chart one can see that the price pattern formed a confirmation to its prior hammer candlestick, signaling a possible new trend to the upside.
With a week of dull economic data, could the shanghai index fuel another week of gains?
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