Thursday, 28 April 2011

China- it's do or die time

Good Evening All,

It was great to get so much feedback on yesterdays post. I received many personal emails and I thank you for the contact.  It was also somewhat timely seeing the performance of the ASX200 yesterday, closing firmly down despite a 1% positive lead from the US. Certainly, it seems that many of us in Australia are very aware of the inherent US/Atlantic bias that perpetuates our society.  No doubt this was reinforced during the Financial crisis which brought home the realities of a globalised world. However, as we continue to recover from those extreme events, I believe the processes of de-coupling here in Asia will foster the necessary modifications in our social psychology leading to genuine change and action.

It has been a while since I am updated my outlook on the Chinese and Indian market. Both markets appear at quite critical junctures to me and need to get moving to the upside very shortly otherwise my bullish scenarios are invalidated:

Shanghai Composite Daily:
Price broke out of the initial base pattern and the 3000 level, so I got long. However, price clearly failed just short of the Daily downward trendline and I was stopped out as price reversed. The recent high is now our marker and closes above this level are bullish. Position traders need to be patient once more

Shanghai Composite Daily (ii)
The longer term consolidation pattern

Price should not trade lower than 2800/2850 to keep the bullish scenario intact. These levels are the 50/61.8 retrace levels from the last major January swing low; previous support levels; and the upward trendline. Wait for bullish confirmation out of these levels. If the market keeps falling through here than this would potentially be a bearish setup.

India has also struggled at the downward trendline on the Daily chart. The market has spent the last 2 weeks consolidating in a clear range. This is a great short term pattern to exploit and wait for a trigger entry

Nifty Continuous Daily:
I do believe the bigger picture is bullish given the strong base pattern. Momentum made a new high thus we should be looking to buy the first pullback or consolidation pattern. 

Nifty April 60mins: 
Look for a clear breakout of this range as the entry trigger

It is set to be an interesting few sessions and I will update when I see anything meaningful