Chart of the day: Steady up in Shenzhen

It may not feel like it, especially when one reads the rather breathless media hype, but observed volatility in the Shenzhen A-share index dropped sharply this month. Once again, triangle support kicked in for a third time this year, increasing the importance of this trend line. The hammer candle is a powerful bullish signal, but more importantly forms part of a series of coils, twists and turns in what we feel is an attempt at forming a lasting base. Expect a cautious test of triangle resistance, with a break above it pushing prices to the top of the B wave. An eventual move to November’s high at 2,140 points, where the correction lower started, is on the cards.

Nicole Elliott is a technical analyst