In mid-January, we noted that the ChiNext growth enterprise board’s trend to lower prices was on declining volume, suggesting reluctant sellers and a waning bear move. We advised readers to watch the candles carefully to spot basing activity, preferably something sharp and dramatic. Though it was not as fast as we had hoped, we have ended up with a large V-shaped reversal. From February, volume and volatility picked up, suggesting a new group of active participants in this market. This week, we are testing long-term trend-line resistance – and struggling. We should get a clear close above this line adding to bullish momentum soon, if not by Friday. We would then favour a rally through 1,950 points to the psychologically important 2,000-point level.
Nicole Elliott is a technical analyst