Shanghai Composite Index Elliott Wave technical analysis [Video]

Shanghai Composite Elliott Wave analysis

Shanghai Composite technical analysis – Daily timeframe

Function: Trend.

Mode: Impulsive.

Structure: Orange Wave 3.

Position: Navy Blue Wave 3.

Next higher degree direction: Orange Wave 3 (Ongoing).

Details: Orange wave 2 appears complete; orange wave 3 of 3 has started.

The daily chart for the Shanghai Composite Index highlights strong bullish momentum within a defined uptrend. The current wave structure shows orange wave 3 advancing inside a larger navy blue wave 3. This suggests that the market has finished its orange wave 2 correction and is now entering a typically forceful phase of the Elliott Wave impulse.

With orange wave 2 concluded, orange wave 3 has taken over, reflecting notable upward momentum. This phase shows significant buying strength and aligns with the classic “wave of recognition” concept, where the trend becomes evident to a larger number of market participants. This suggests a possible strong extension before any pullback.

The wave structure provides valuable insights for investors to gauge the broader cycle. The potential for further upward moves is high in this wave 3, though a correction will follow. Traders should watch for continued strength but remain cautious for signs of wave completion and the next retracement.

Shanghai Composite technical analysis – Weekly timeframe

Function: Trend.

Mode: Impulsive.

Structure: Orange Wave 3.

Position: Navy Blue Wave 3.

Next lower degree direction: Orange Wave 4.

Details: Orange wave 2 appears complete; orange wave 3 of 3 is currently active.

The weekly chart of the Shanghai Composite presents a strong bullish picture, supported by impulsive wave characteristics. Orange wave 3 is advancing as part of a broader navy blue wave 3, indicating a completed orange wave 2 and the start of an aggressive bullish cycle.

Wave 3's impulsive nature reveals strong buying activity, likely from institutional investors. This aligns with a prolonged bullish phase, often the most rewarding part of the wave structure. Orange wave 3 currently appears to be the dominant upward move within the ongoing trend.

This analysis provides traders with long-term context about the index's trajectory. The current structure implies sustained momentum, but it’s essential to anticipate orange wave 4 once the ongoing rally matures. Risk management is crucial while benefiting from this extended move.

Shanghai Composite Index Elliott Wave technical analysis [Video]