The index, which tracks the top 300 shares traded on the Shanghai and Shenzhen stock exchanges, retreated a bit more than we had allowed for, possibly because of the thin markets in December. It has retraced a Fibonacci 38 per cent of last year’s steady rally and, on Monday last week, appeared to have based with a hammer candle against the 200-day moving average. Volume on that day was roughly double the recent norm. The index potentially forms a double bottom with the low on December 26 with a daily close above the 50-day moving average confirming. This would represent a new interim low in the series that has dominated since the first quarter of last year. Expect a squeeze to 3,500 points.