Chart of the day: Positive outlook for Shanghai A shares
Established by Chinese President Xi Jinping on Saturday, the Financial Stability and Development Committee will have its operations coordinated by the People’s Bank of China, which in turn takes on a bigger role in managing financial risk. The decision has caused some big price swings in equities, taking historical volatility to a high for this year. However, as more details emerge, it is beginning to be seen as a sound move. Volume in Shanghai’s A shares soared on Monday and Wednesday, adding weight to our view that the new body ought to be seen as positive for the markets and the Chinese economy. With help from the Ichimoku cloud, we expect the Shanghai A-Share Index to rally back up to Fibonacci retracement resistance.
Nicole Elliott is a technical analyst