Chart of the day: Shenzhen’s a star

A month ago we suggested that it was time for a sustained break above horizontal resistance at 2,140 points. This has now become support, underlined by last week’s bullish hammer candle, which created the conditions for the next four consecutive bullish daily ones (almost meeting our first upside target at 2,245). Moving averages are clearly bullish and the 26-day one picked up the pace so ought to act as support; the cloud’s angle also steepened, suggesting growing bullish momentum. Volume was good over the past fortnight, observed volatility is close to historical lows. Obviously yuan weakness against the US dollar supplies an underlying bid, investors hedging against this via Chinese stocks. Our next target remains at 2,300.

Nicole Elliott is a technical analyst