For traders, the "death cross" indicates that a recent short-term decline is likely to evolve into a long-term downtrend.
"If the government is tiring of its intervention measures and the [Shanghai] market is continuing sideways around a 4000 level, the death cross could be particularly significant," Angus Nicholson, IG market analyst, commented in a recent note.
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A-shares had enjoyed a brief spell of stability following a stinging rout that kicked off in mid-June. Investors attributed the recent calm to the government's package of market-boosting policies, which include a ban on short-selling and widespread trading halts.
But losses returned this week after comments by China's securities regulator sparked fears that authorities would withdraw support measures, sending the Shanghai Composite tumbling 6 percent on Tuesday and 5 percent on Wednesday.
Volatility is a normal scenario for markets such as China when coming off such elevated peaks, independent analyst Fraser Howie told CNBC on Wednesday. The index hit a more than seven-year high on June 12 before succumbing to the severe sell-off.
"I'm not saying we're on the brink of collapse, but expect a general downward trend," he said.
Still, it would be highly unlikely Beijing would let local indices plummet given the aggressive nature of its ongoing intervention, noted IG's Nicholson.