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2018 is a year of turbulent Chinese stock market. From the US President’s announcement of trade sanctions against China on 2018/03/23, China’s stock market experienced two thousands of company day limit down in 2018, and the Shanghai Composite Index was created on 2018/10/18. The new low of 2,449.20, starting from the high point of 3,587.03(2018/01), the Shanghai Composite Index fell by 1137.80 points in 2018, a drop of 32%, the largest annual decline since 2009 in the past decade.
WIND data shows that as of 2018/10/19, there are 485 companies with a pledge shareholding ratio of 90% , of which 117 companies have a pledge shareholding ratio of 100%. A sharp fall in stocks will cause these companies with high pledge rates to lose their shareholding.
On 2018/10/19, Liu Shiyu, chairman of the China Securities Regulatory Commission(CSRC), said in an interview with Xinhua News Agency that the CSRC encourages various types of funds, qualified private equity investment funds, and volume management products managed by local governments to jointly organize new funds. Helping listed companies with development prospects but temporarily in business difficulties to ease the plight of stock pledges and promote their healthy development. At this point, the Shanghai Composite Index began to rebound.
After three months of consolidation at the bottom, the Shanghai Composite Index began to rise after hitting a new low of 2,440.91(2019/01/04). The weekly line closed 8 consecutive positive lines and the Shanghai Composite Index was close to 3,000 points on 2019/03/01. Dramatically, the eight-month decline has risen back in two months.
However, the factors that open the news are not considered. From the perspective of cycle theory, the time when the Shanghai Composite Index has reached a high point in the past 20 years is 1993/02, 2001/06, 2007/10, 2015/05, respectively. In 6-8 years, there will be a big wave of long-term market, and every time there is a high point, there will be at least a three-year down cycle. From a technical analysis point of view, the fall of 2018 seems to be in line with Gann’s cycle. The theory coincides.
Therefore, this study explains the trend of China's stock market in 2018 by using the Gann cycle theory, Gann angle line, Gann wave rule, and these technical analysis. I hope that we can find out the market cycle according to the historical fluctuations of China's stock market. Help us predict future trends.
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