Shanghai A share index has made some clear break out to the upside this week but finally close under the mentioned resistance (2180). Week high was 2302 but closed at 2165, barely above the week low 2151. Trading volume apparently increased.
In candlestick, this week is an inverted hammer with very long upper shadow (bearish), indicating strong selling force at the upper side. With the sign of increased trading volume, it could be the start of the sub wave 5 (downward) mentioned here for few weeks. And though the level 2260 was once broken up (probably due to the huge fat finger mistake done by one China securities firm), the market closed far below that level. If the index break down and close below this week’s low (2151), we could further assume that wave 5 down has begun.
Outlook Next week
Bearish with following support and resistances
2151 – Week low
2057 – 3 week’s low
2180 – 38.2% retracement of wave 5-i to wave 5-iii,
2260 – wave C-5-1 bottom, close above this to void the bear wave model