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The Shanghai Composite closed the day down 1.90% and down 11.97% since the interim high on November 8. China's surprise weekend rate increase of 0.25% follows a previous hike of 0.25% on October 19th in an ongoing effort to combat inflation. Will this rate hike further accelerate the market's decline into correction territory? The October rate hike was followed by a 5.3% rise in the Shanghai Composite over the next 14 sessions. This time the initial market reaction looks a bit different.
While I was pondering this issue, technical analyst Chris Kimble must have read my mind (not the first time) and sent me the chart below with a Fibonacci technical twist to the debate.
Chris comments: The SSEC (Shanghai) Index ran into its 38% Fibonacci resistance over a year ago. Since then the index has created a series of lower highs. Now the index is looks to be testing and possibly breaking rising support off of the July lows.
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