The Shanghai Index has developed a strong breakout above the resistance level near 3000 with a upside target near 3400. The short-term group of averages in the Guppy Multiple Moving Average (GMMA) indicator has moved above the upper edge of the long-term GMMA.
This is bullish. A strong uptrend breakout is signaled when the lower edge of the short-term GMMA moves above the upper edge of the long-term GMMA.
The long-term GMMA degree of compression has shrunk to 39 index points compared with 69 index points last week. This shows investors are increasingly more confident about the sustainability of the new uptrend. This increasing rate of compression in the long-term GMMA means a strong rally has more chance to develop because investors are more confident and they will also participate in the rally. This combination of factors helps to accelerate the trend change.
The classic GMMA pattern of bullish test and re-test behavior is often associated with the change from a downtrend to a new uptrend. There are four parts in this Shanghai Index pattern .