We earlier advised readers to watch the candles of the chart on the ChiNext Growth Enterprise Board carefully to spot basing activity, preferably something sharp and dramatic. We certainly got that last week, with a massive Marabuzo bullish engulfing candle that has overtaken all price action of the previous four weeks. This seldom-seen phenomenon lies in stark contrast to the drubbing Western stock indices suffered in March. It reinforces the effect of the large V-shaped reversal we spotted in February, and strong volume underlines the interest in this market. However, it is not all plain sailing just yet, as the 50 per cent and Ichimoku cloud resistance around 1,935 points must still be conquered. If broken decisively, expect a rally to 2,300 points.
Nicole Elliott is a technical analyst