ChIna’s 50 stock index (CHI50 cash) ignored all nearby 2018 barriers on Monday and skyrocketed to 15,983, recording its best daily gain ever.
After such an impressive rally, some downside retracement could be reasonable as markets do not move in one direction. The RSI and the Stochastics have also entered the overbought territory, but have yet to show signs of weakness, suggesting that there might be some room for improvement – may be a limited one – before a reversal takes place.
Currently, the spotlight is on the 16,000 psychological number. If buyers persist above this level, the target will shift towards the 17,000 resistance taken from March 2008.
On the way down, today’s open price of 15,130 may need to act as a support to deter additional negative corrections towards the previous high of 14,678. Lower, the sell-off may stall around 14,240.
In brief, the CHI50 index is looking cautiously positive in the short-term, with immediate resistance expected to emerge near 16,000 and support at 15,135.
