Two weeks ago I wrote that the Shanghai Stock Exchange Composite Index was about to test trendline resistance. Indeed, the index tested the resistance and managed to break above it. Although a first significant step was taken, higher momenutm will be required to propel the index towards its 200-day simple moving average.
The upside break of the upper trendline of the down-channel formed after the highs of April 2011 may be seen on the weekly chart above. Next resistance levels is near 2400 and the target is near the 200-day simple moving average at 2550. However, a move towards 2550 will require a buildup of momentum. This means that both the RSI(12) and the EMI(12) must cross their neutral level to the upside. Given the quality of recent price action that will be a real challenge.
Disclosure: no relevant positions.