Chinese Premier Li Keqiang confirmed at the National People's Conference last week that China's gross domestic product growth target for 2014 was set at 7.5 percent. However, he indicated that there is some tolerance for slower growth, which made world markets shudder.
The Shanghai Composite Index was also uncertain by this indication as it moved to potentially complete a broader strategic reversal pattern. The retreat from the February 2014 high of 2177 is now near the 1980 support area, indicating that the index is developing double-bottom behavior near the 1980 level.
The double-bottom pattern develops rebound activity; this behavior is shown by the thick lines on the chart. Traders and investors should wait for a retreat and rebound within the environment of a double-bottom trend reversal pattern.
(Read more: Chinese Premier hints at tolerance for slower growth)