The Shanghai Composite Index has strong bullish targets all the way up to 4733, according to David Sneddon and his team at Credit Suisse in London.
Sneddon first turned bullish Chinese Equities back in July 2020 with the expectation that Chinese Equity market strength would broaden out and become a major theme for 2021. With this in mind, he says the Shanghai Composite Index has now surged above the series of highs from the second half of last year at 3459/66 and the 38.2% retracement of the entire 2015 to 2019 bear market at 3487, resolving the sideways range higher for the completion of a bullish “triangle” pattern, as well as a five-year base (see Chart). Sneddon sees next key resistance at 3587, the key high of 2018. Above here would reinforce the multi-year base, with the next resistance level at 3685 (the late 2015 high) with the “measured triangle objective” seen at 3756.
Overall, Sneddon sees scope for the 61.8% retracement of the entire 2015 to 2019 bear market at 4133, with a new “measured base objective” at 4733, and says Chinese equity strength will be supported in 2021 by a weaker USD and further strength in industrial metals. He thinks that only a move below 3325 would see a trading range re-emerge.