Shanghai Composite, currently at 2880.5 faces resistance from 2925 to 2952 ahead. It has manged to surpass our intermediate resistance around 2725, but on the long term charts it has still to go a long way to reach its 38% retracement level poised around 3970 levels. The Indian markets (BSE and Nifty) has covered more than 50% of their retracement so far. Comparatively, China lags behind in doing so.
But, as you can see in the chart above that everything looks gung ho so far. RSI is diverging very positively and there is bullish convergence of the moving averages also. These three moving averages (dma or sma) would work as strong supports for short, medium and long term. So, investors should invest on declines at these levels, 200dma being the final stop.
For short term traders, 2750 should act as a stop loss. No fresh longs below here for short term traders. Medium term traders may buy at lower levels as long as 2420 is holding.
