Shanghai A share index has made a lower low this week down to 2336 but able to close near the high (2441) at 2437. Trading volume has increased slightly w.r.t. last week, but not as much as previous ones in January. Nevertheless, it is a bullish signal for the index.
It is now hard to determine if the wave 2 correction has finished. Given the not so strong upward trading volume and the time elapsed, the best guess now is that the current bullish movement these few days is a larger rebound in wave 2 (wave 2-B). By introducing parallel price channel to the daily chart, the current rebound can reach up to 2480-2500 (given this week’s high 2441 can be broken up).
However, if we observe there is large trading volume breaking up 2500 in the coming days (possibly gap up), we can assume wave 2 correction is ended and wave 3 has started.
Weekly
Daily
Outlook Next week
If the index can break up 2441 (week high), it may reach 2480-2500. Observe trading volume if the index reach there.
Support
2360 – 38.2% retracement of wave 1
2336 – Last week low
Resistance
2441 – Last week’s high, also 10 week’s moving average
2480 – Parallel channel peak
2500 – 100 week’s moving average
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