Shanghai Composite Index Wave technical analysis [Video]

Shanghai Composite Wave technical analysis

• Function: Trend.

• Mode: Impulsive.

• Structure: Orange Wave 3.

• Position: Navy Blue Wave 3.

• Direction next higher degrees: Orange Wave 3 (started).

• Details: Orange wave 2 appears completed; orange wave 3 of 3 is now underway.

The Shanghai Composite daily chart showcases the development of a strong upward trend within an impulsive Elliott Wave formation. Following the completion of orange wave 2, the index has initiated orange wave 3 as part of the broader navy blue wave 3 sequence. This progression marks the start of one of the most energetic and momentum-driven phases in the Elliott Wave cycle.

Orange wave 3 typically represents the strongest part of the trend, known for its powerful price acceleration and extended movement in the direction of the prevailing trend. With wave 2’s correction now behind, conditions are favorable for a continued upward surge. Historically, wave 3 often surpasses wave 1 in magnitude and momentum, aligning with the current structure that indicates strong bullish pressure.

The daily chart offers essential insight into this wave formation, reflecting a key phase within a much larger bullish cycle. The transition into navy blue wave 3 suggests the potential for a multi-timeframe uptrend. This makes the current wave 3 phase a critical opportunity for traders, particularly those looking to capitalize on high-momentum moves.

Traders should watch wave 3 for standard characteristics such as consistent price progression and expanding momentum. During this phase, maintaining a bullish bias may be ideal, though attention should be given to signals that might indicate a wave top is near. Price action and supporting indicators will serve as key tools in evaluating the wave’s maturity.

The next expected development is orange wave 4, which will follow the completion of the current impulsive move. Wave 4 is anticipated to be corrective, offering a potential retracement before the continuation of the broader uptrend. Since wave 3 usually delivers the most favorable risk-reward ratio in Elliott sequences, this is considered a prime stage for trend-following approaches.

Shanghai Composite Wave technical analysis

• Function: Trend.

• Mode: Impulsive.

• Structure: Orange Wave 3.

• Position: Navy Blue Wave 3.

• Direction next lower degrees: Orange Wave 4.

• Details: Orange wave 2 appears completed; orange wave 3 of 3 is now active.

The Shanghai Composite weekly chart reveals the progression of a robust bullish trend within an impulsive Elliott Wave framework. Following the conclusion of the orange wave 2 correction, the index has initiated orange wave 3 within the broader navy blue wave 3 pattern. This indicates entry into one of the most forceful and sustained phases of the market’s uptrend.

Orange wave 3 represents the central driving leg in the Elliott Wave structure, typically associated with the most intense and accelerated price action. With wave 2 correction completed, wave 3 is expected to extend significantly, often surpassing the magnitude of wave 1 in both distance and momentum. The current setup suggests continued strength in the upward direction before the next corrective phase begins.

The weekly timeframe provides a strategic outlook on this developing formation, emphasizing that the market is in a critical phase of a broader, long-term bullish move. The emergence of navy blue wave 3 at a higher degree supports the potential for an even more pronounced multi-timeframe trend.

Market participants should closely observe wave 3 for hallmark traits like consistent momentum, growing volume, and sustained price action. This analysis encourages traders to maintain bullish exposure during this phase, while staying alert for signs of wave 3 nearing completion. Price behavior and supporting technical indicators will be crucial for confirming trend continuation or potential reversals.

Looking ahead, orange wave 4 is the next expected development once wave 3 completes. This phase will likely be corrective and could offer a valuable pullback opportunity ahead of any further upside continuation. Wave 3 typically provides the most favorable trading conditions in Elliott Wave cycles, making this a prime time for trend engagement.

Technical Analyst: Malik Awais.

Shanghai Composite Wave technical analysis [Video]