(Bloomberg) -- China’s Shanghai A Share Stock Price Index will probably “consolidate” as it nears a key resistance level of 3,000, UOB-Kay Hian Holdings Ltd. said. The index touched a high of 2,862.15 yesterday, surpassing UOB-Kay Hian’s April 23 forecast of 2,860, Hong Kong-based analyst Barole Shiu said in a report today. The resistance level of 3,000 is 5 percent higher than yesterday’s close. “Though the gapping up is accompanied by heavy trading, the upward momentum could be partially offset by the negative divergence of the moving average convergence/divergence,” or MACD indicator, Hong Kong-based Shiu wrote in a report today. The indicator compares nine-, 12- and 26-day moving averages to assess whether a price shift is a change in trend or a short- term deviation.
As of yesterday, the Shanghai A Share index had gained 49 percent this year. The Shanghai Composite Index, which tracks both local currency A shares and foreign currency B shares, had advanced by the same amount, making it the fourth-best performer among Asian benchmark indexes tracked by Bloomberg. Any advance above 3,118, marking a 61.8 percent retracement of the slump from the May 2008 high, based on a Fibonacci chart, will prompt UOB-Kay Hian to raise the index’s resistance level to between 3,373 and 3,475, the analyst wrote.Fibonacci analysis uses ratios, which are based on the sequence identified by an Italian mathematician in the 13th century, to predict support and resistance levels for prices. Sentiment will “turn sour” if the 50-day moving average doesn’t hold at the current level of about 2,618 and if the MACD indicator falls below zero as the Shanghai A Share Index consolidates, Shiu said in the report. The scenario is “less likely,” he added.
No comments:
Post a Comment