HOW THE 50 MA POINTED TO A CRASH IN CHINA'S STOCK MARKET AND ALL MARKETS OVER THE WORLDKETS OVER THE WORLD
Read the financial news and they will tell you all kinds of reasons why the markets all over the world should fall. As a technical analyst it is our duty to look at charts and see recurring patterns that never change in the history of mankind. One important event to the technician is where the stock is in relation to its 50 MA.
This is very true if an index has not fallen below its 50 MA for a very long time as can be seen on the Shanghai Composite Index.
It's just as simple as that!
- If the index is above its rising 50 MA, we are in a healthy market
- If the index drops below its 50 MA, it is a big warning sign that there is weakness in the market
This is very true if an index has not fallen below its 50 MA for a very long time as can be seen on the Shanghai Composite Index.
It's just as simple as that!
You can see by the chart above how the Shanghai Composite index begin a bull market back in Aug 2014. While the index was above its rising 50 MA, investors enjoyed relatively peace and profits. Once the index dropped and close decisively below its 50 MA in June 2015, the Chinese market went into chaos and brought along the rest of the world with it.
