If you own Chinese stocks, you know the problem: Once popular stocks like Baidu, Alibaba or Tencent have lost a significant amount of value in the past 12 months.

But the worst could be yet to come. The Chinese stock market is currently breaking through a crucial long-term support level.

A support level that has held for 10 years. From here, there have been reliable bottoms and subsequent major rallies.

Shanghai Index: Upward trend broken for the first time in 10 years – danger of crash! Source: finanzen.net/ own representation

This signal would be devastating! But this time it doesn’t seem to work. And this is not about an arbitrary line on the chart, but about a strong selling signal for large funds. When this happens, large investors have to act and withdraw their capital on a large scale for safety reasons. This dramatically increases the downward movement – the result is a crash!

Take a look at my chart above. You can see the Chinese stock index „Shanghai Stock Exchange Composite Index“ there.

Shanghai Index: Crash to 2000 points preprogrammed A chasm now yawns there, which could cause the China index to crash to 2,000 points in the next step. That would be a further decline of over 30 percent from the current price level – a real crash!

This development means that the stock market has given up hope of a recovery in China, that further declines will follow, and that large investors will withdraw their capital massively from China in the coming months. Dramatic weeks are ahead for the Chinese stock market!

In my next post on this topic, you will learn WHY this dramatic development is happening right now. Because the chart is just a kind of thermometer that indicates an illness.