FXStreet (Delhi) – Piotr Matys, Research Analyst at Rabobank, suggests that with the Shanghai Composite Index (SHCOMP) having the worst start ever to a new year plunging 6.8% on January 4, the research house has decided to revisit their technical view. Key Quotes “To quickly recap, after bottoming at 2850.714 on August 26 the SHCOMP produced an impressive recovery in Q3 and Q4. That said, the 3680~ level proved tough to clear for the bulls. When analysing the markets from the perspective of technical analysis we often look for patterns. In case of the Shanghai Composite Index the price action throughout the second half of last year can fit into a triangle marked on our daily chart. It is important to emphasise that a break from a triangle pattern tends to set direction for at least few weeks. Therefore, the SHCOMP could be leaning towards the 2015 low at 2850.714 last summer when the stocks were in a full-scale meltdown. While it seems that China’s “national team” once again stepped in to stabilise the market following yesterday’s rout, the damage to the upside trend from the last year’s low set in August has been already done. A strong rebound above the 3500~ pivot is required to shift the bias to the upside again. Our baseline long-term scenario expressed on previous occasions that the wave (III) - marked on the weekly chart - may unfold is still valid as long as the SHCOMP continues to trade above the long-term ascending trendline (currently at 3100~) from October 2014 low, but there is no denying that the 6.8% selloff dented our conviction.” For more information, read our latest forex news.