Tuesday, February 4, 2020 10:04 PM EDT
Daily Timeframe
The Shanghai index gapped down in price 8% on Monday, February 03 as you can see by the daily timeframe chart below. This large gap down in price on coronavirus fears could very possibly be a buying opportunity, especially for the long-term.
Shanghai Composite Index Daily Timeframe Chart
Weekly Timeframe
On the weekly timeframe chart below you can see where the Feb 03 gap down went a little lower than the August 06, 2019, low, and now has currently recovered trading a little higher than 2,800 right now.
Near-Term Major Price Support
Current near-term price support is at 2,625.83 to 2,684.76 and needs to hold for any possible upside from here.
If you do take a long position in the Chinese market, consider this price area as your stop-loss.
Shanghai Composite Index Weekly Timeframe Chart
Monthly Timeframe
On the monthly timeframe chart below you can see that the Shanghai index price is still above its multi-year low of 2,440.91 in January of 2019.
Shanghai Composite Index Monthly Timeframe Chart
Shanghai Index and Stocks Buy Recommendation
We recommend lightly buying this gap down in price on the index and or individual leading China stocks. In the short term, there could be more downside and volatility. In the long-term, this large gap down in price has greatly reduced longer-term risk and very possibly provided larger price appreciation.
Buy On Fear Sell On Greed
Large selloffs like these in the short-term are scary to say the least but this is when discounts in the markets at their deepest with lower risk and higher reward potential. Look further into buying only leading Chinese stocks and you may very well be rewarded with some profits later on.
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U.S. Government Required Disclaimer - Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large ...
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Disclosure: Financial Markets Risk Warning
U.S. Government Required Disclaimer - Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
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