Chart of the day: Upside potential in ChiNext
As we wrote about the ChiNext index in January, the A, B, C-type correction lower ended with a daily hammer candle against long-term trend-line and retracement support. Since then, volume has dropped a little though observed volatility is a bit higher, highlighting the confused thinking on this index. After the Lunar New Year holiday, prices rallied to their highest in 12 days, holding above the 10-day moving average, so that momentum is about to turn bullish. Upside pressure should increase on a weekly close above 2,516 points, the midpoint of the range over the past 12 months. We continue to expect a recovery to the 2,620-point area, a 50 per cent retracement of losses since November, and maybe more over the long term.
Nicole Elliott is a technical analyst