Is The Chinese Market About To Decline 30%?

Hang Seng Monthly Chart,

Hang Seng Monthly Chart,

As the eyes of the world are on Russia and Ukraine (and Vladimir Putin versus Joe Biden), what happens next in the Chinese markets could be a big deal as well.

The Chinese economy has the ability to tip the scales of the global economy, and one of its leading indicators is flashing a warning sign: The (Chinese stock market index).

Today’s chart takes a long-term monthly look at one of the most important stock market indices in the world.

As you can see, the index has spent the past five years forming a bearish descending triangle with dual support at (1) – both the bottom of the triangle and long-term uptrend line.

If support at (1) fails to hold, then a measured move may be in play. In this case, a measured move suggests the index could decline to (2), or the 16,000 area, which is more than 30% below current trading levels.

Looks like this is an important test of support for China, as well as the world. Stay tuned.

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