Chart of the day: Chinese stocks going strong
Volume and observed volatility on the ChiNext Composite Index have been steady over the past year even as prices have dropped in two distinct steps, where the C leg is just a tad shorter than A. Over the past three months, it has formed a basing pattern that might be best described as an irregular inverted head and shoulders. Moving averages have already crossed to bullish and the lagging line has broken through the candles and the averages of 26 days ago. This suggests that over the next five to 10 trading days, the index should make steady progress through the fairly thick cloud, then breaking above trend-line resistance towards the measured target at 2,565 points.
Nicole Elliott is a technical analyst