There are two resistance features for an uptrend continuation.
The first resistance feature for the breakout above the level near 3,440 is the long-term historical resistance target near 3,650. This is best seen on a weekly chart. This was a strong resistance level in November 2015 to January 2016. This strong resistance suggests the market may consolidate near this 3,650 level.
The second resistance feature is the value of the long-term uptrend line. The current value is near 3,500.The uptrend line started in May 2017 and acted as a support feature until November last year. It was tested five times as a support feature so it has a confirmed and powerful influence on the market. The value of this line will now act as a resistance feature.
This is a fast rally with limited consolidation. It is not possible to reliably set an uptrend trend line. The future pattern of rally, retreat and rebound rally will set the first anchor point for a new uptrend line. When this is established it will be possible to set more accurate index targets.
Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders, which can be found at www.guppytraders.com. He is a regular guest on CNBC Asia Squawk Box. He is a speaker at trading conferences in China, Asia, Australia and Europe. He is a special consultant to AxiCorp.
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