The Shanghai Composite Index is technically in bear-market territory, but it looks really more like a severe correction at this stage, according to the charts, technical analyst Daryl Guppy, CEO of Guppytraders.com, said Thursday.
The key factor for the Shanghai market will be its ability to test support at the 2,600-level, said Guppy told "Squawk Box Asia."
"What we are looking for is strong support to develop between 2400 (and) 2600 and a rebound from that level," he said.
A rebound from the 2600 level, prior to China's national day holidays, would be the index's most bullish outcome, Guppy added.
Hang Seng Needs to Consolidate
Looking to Hong Kong, the "key factor of the Hang Seng Index is that we have broken below (a) trend line," Guppy said. "This also happened with the Shanghai Index."
Investors need to see a consolidation between 19,000 and 21,000, he said. Falling below the 19000 level would be very bearish, setting a downside target of 17500.
As for thef the Bombay Sensex in the short-term, Guppy said the consolidation level of the stock should take place between 14,080 and 15,080.
"What we are going to do is test the bottom of this consolidation level and we are looking for a rebound away from it," Guppy said. "Failure to hold that bottom level sets a downside target of about 13,600."
Commodities
On the commodities front, Guppy charted London White Sugar Futures where he said trends showed a "topping out" of the markets.
"What we can see is a reduction of the speed of the momentum of the trend. That means a pullback to say around the 540 level and a continuation at a slower rate of descent."
When he charted natural gas, Guppy saw a solid downtrend with the unlikelihood of any trend reversal.
"This is a commodity to go short on, rather than long at this stage."