The triangle pattern includes a base or vertical edge of the pattern created by 7 days of falling index activity starting from the high of 2,061 on May 13. The height of the base is measured and used to calculate the upside breakout target near 2,125. This target was rapidly achieved and exceeded.
The triangle pattern has developed inside the very wide trading band that extended from support near 1,980 to resistance near 2,160. A strong rally breakout similar to the breakout in February can reach the upper target level near 2,160. Again this has been achieved and exceeded.
Read MoreChina to top business travel spending by 2016
The upside target is calculated by measuring the width of the trading band and projecting this upwards above 2,060. This gives a long term target near 2,340. This was a support level July of 2011, and again in October that same year. It acted as a resistance level in both March and June of 2013. An extreme upside target is near 2,450.
The current index activity has not stabilized so it's not possible to suggest which of these targets is achievable and the time frame for these moves.
Read MoreIs China set up for a 'perfect storm' in 2016?
Hence, these interpretations suggest the rally will retreat. While the upper edge of the long term trading band near 2,160 is the obvious support target, the rally has some of the characteristics of a parabolic trend. These trends collapse rapidly and typically retrace around 50 percent of the up move. This would mean a retreat to the area near 2,110, or down about 3.5 percent from current levels.
Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders – www.guppytraders.com. He is a regular guest on CNBCAsia Squawk Box. He is a speaker at trading conferences in China, Asia, Australia and Europe.