Chart of the day: Chinese bourses back with a bang

Traders and investors returned from their week-long National Day holiday in China in a bullish mood. Many Chinese stock indices gapped higher to hit their strongest levels in almost two years. Take the Shanghai Composite Index, which was capped on Monday at 3,410 points, just shy of our first target at 3,418 points, which was equivalent to where the lagging line (which plots closing prices only) met the top of the trend channel this week. The gap created on Monday could be filled over the next couple of weeks, but we see this as a buying opportunity for a rally to Fibonacci retracement resistance at 3,460 points this month. All aspects of the Ichimoku cloud chart are also positive.

Nicole Elliott is a technical analyst