Chart of the day: Head and shoulders
The H-share index has formed an inverted head-and-shoulders pattern over the past six weeks, the highest point being 8,411 points and the neckline at 8,249 points, which was Wednesday’s opening price after gapping higher. This combination plus bullish moving averages since the end of the month suggest that despite a host of resistance levels on the way up, a squeeze to our measured targets is possible. This should, however, be seen in the context of the bigger picture where Chinese indices have been in bear trends since mid-2015 and rallies so far are very much corrective bounces. This one is likely to be short and sharp, possibly extending beyond our targets, based on the height between the head’s low and the neckline.
Nicole Elliott is a technical analyst