The Shanghai Composite index has developed a strong rebound from the upper edge of the long-term Guppy Multiple Moving Average, or GMMA, (in red on the chart).
The rebound rally shows that investors are confident about the strength of the index's trend. The market has broken resistance near 2210 – a significant historical resistance level. A sustained breakout above 2210 is very bullish and sets the next upside target near 2330.
This is a classic GMMA trend test-and-continuation pattern. This develops when the index falls towards the upper edge of long-term GMMA, the long-term GMMA acts as a support level and the index then rebounds, continuing the uptrend.
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The position of uptrend line B is adjusted to include this retreat-and-rally rebound pattern. The new uptrend line has three anchor points, and is now near the upper edge of the long-term GMMA.