There is a indefatigable media approach that always finds something to criticize around China’s economy.
China’s growth is on track, but the reports are always surliness by warnings of doom, or suspect economic figures. Despite that, China’s concision remains robust and healthy.
The Shanghai composite index developed a concisely consolidation period around a resistance level near 3,440. As look for, the market retreated from 3,440, but it very quickly developed a better than average rebound and a continuation of the rally.
The retreat did not fall below the lower side of the short-term Guppy Multiple Moving Average. That is very bullish behavior. The short-term GMMA did not exploit any significant compression with this pullback and this shows extremely strong trader confidence in the continuation of the uptrend.
Short term, retailers are very confident about the trend direction and are actively buying at any writing on the wall of index weakness.
The long-term GMMA, which tracks the sentiment of investors, has walk into a stop up and is expanding. The upper edge of the long-term GMMA has moved above the defiance level near 3,360. Investors are more bullish. They set up become strong active buyers. This strong buying motion is shown with the expansion in the long-term GMMA .
There are two resistance idiosyncrasies for an uptrend continuation.
The first resistance feature for the breakout above the point near 3,440 is the long-term historical resistance target near 3,650. This is first-rate seen on a weekly chart. This was a strong resistance level in November 2015 to January 2016. This hefty resistance suggests the market may consolidate near this 3,650 on the up.
The second resistance feature is the value of the long-term uptrend line. The au fait value is near 3,500.The uptrend line started in May 2017 and skitted as a support feature until November last year. It was tested five metres as a support feature so it has a confirmed and powerful influence on the market. The value of this form ranks will now act as a resistance feature.
This is a fast rally with restricted consolidation. It is not possible to reliably set an uptrend trend line. The future emulate of rally, retreat and rebound rally will set the first anchor applicable for a new uptrend line. When this is established it will be possible to set numerous accurate index targets.
Daryl Guppy is a trader and author of Leaning Trading, The 36 Strategies of the Chinese for Financial Traders, which can be build at www.guppytraders.com. He is a regular guest on CNBC Asia Squawk Box. He is a speaker at buying conferences in China, Asia, Australia and Europe. He is a special consultant to AxiCorp.
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