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Analysis & Views

What can traders learn from the Chinese stock market crash?

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Brett Chatz

The recent equities meltdown in China sent global stock markets reeling, with Chinese policymakers (arguably too late) introducing a range of measures to steady the market. But the broader implications of a Chinese stock market correction are far-reaching for traders. The Chinese stock market is certainly significant in terms of its aggregate volume, but it becomes less significant when one considers that approximately only 15% of Chinese households are invested in the stock market. This does not diminish the importance of Chinese equities on global markets, but it paints a balanced picture of how equity markets impact on everyday Chinese households. In a nation of 1.35 billion people only 50 million people have invested part of their financial portfolios in Chinese equities. The performance of the Chinese stock market is an important barometer of overall economic sentiment in Asia and the world. Since China is the world’s largest consumer of commodities – and by dint of that dictates commodities prices – what happens in China is paramount. Up until June 2015 the Chinese stock market had rallied as much as 150%, but performance slumped soon after as the Chinese juggernaut…

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What are trendlines and how can you use them in your trading?

Written by admin

Brett Chatz

Traders who use technical analysis routinely swear by trendlines as an important means to determine market movements. So how can you use trendlines in your daily trading activity, and what do the different types of trendline tell you? Do you have the power of prediction? Nobody can accurately predict exact price movements in the market, but there are ways to gauge market sentiment by using a combination of technical and fundamental analysis. One of the most beneficial tools employed by traders is the trendline, giving you a simple means to view the general direction of prices over time. In their simplest form, trendlines are used to plot the upward, downward or sideways direction of a series of prices for the market: a commodity, currency pair, stock or index. By connecting up several prices over time, it is possible to create a trendline. When you follow a particular trendline – bullish, bearish or neutral – you can anticipate future price movements of the tradable asset. This will give you a good idea as to the overall direction of market prices in the future. While not a guarantee, trendlines are useful indicators…

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This content is for information purposes only and should not be construed as trading advice.

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