What a week for Dow Jones. The first 2 days of rise was accompanied by low volume and showed lack of strength in the index. The drop on Thursday (268 points ) and Friday ( 176 intraday loss ) has already confirmed the formation of a down channel as depicted in the chart below. Friday’s rebound in the last hour due to better than expected employment data in US, recovers the Dow Jones to positive territory. Nevertheless, the trend is down with clear channel formed and the region of 10192 - 10235 should form the resistance of the upper channel for any technical rebound. I would be more biased towards short positions.
Shanghai Stock Exchange
The SSE did not manage to recover above 3000 point following last week’s drop and has been consolidating between 2918 and 3008. This zone seems to be the base for any technical rebounds. On Friday, SSE manage to barely hold around 2918 low point with a doji candlestick. On the mid term horizon, SSE will continue to undergo short selling pressures and the 200D MA around 3000 point will be the immediate resistance it would have to surmount to have a successful rebound.
Hang Seng
The 600 pt drop on Friday brought Hang Seng to the base of a down trend channel that extends from the head of the head and shoulder formation. Any rebound would have to clear 20148 ( 200D MA ) and will meet with channel resistance at 20433.
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