The Shanghai Composite is testing a very long-term descending trendline that has capped price for nearly two decades.
Price is currently sitting at a major historical decision zone.
Key observations:
• Price is above the 50-week SMA → improving momentum
• However, a confirmed breakout has not occurred yet
Bullish Scenario (Long-Term Breakout)
If price breaks and holds above the long-term downtrend line:
🎯 Targets
• Target 1: 4,200
• Target 2: 4,800
• Target 3: 5,500+
🛑 Stop Loss
• Weekly close back below 3,650
Rationale:
A confirmed breakout would signal the end of a structural bear market and the start of a long-term bull cycle.
Bearish Scenario (Rejection)
If the index fails at the descending trendline:
🎯 Targets
• Target 1: 3,200
• Target 2: 2,800
• Target 3: 2,400
🛑 Stop Loss
• Sustained break above 4,000
Rationale:
Rejection would imply the market remains stuck in a long-term consolidation / bearish structure.
Technical Summary
• Breakout above trendline → Structural trend reversal
• Rejection → Bull trap risk
• This is a once-in-years technical level
Brief Fundamental Outlook – China Equity Market
• Bullish factors:
• Government stimulus measures
• Attractive valuations vs global markets
• Strategic push toward domestic capital markets
• Risks:
• Property sector stress
• Slower economic growth
• Geopolitical tensions
Fundamental Takeaway:
China’s equity market offers long-term recovery potential, but timing is highly policy-dependent.
Price is currently sitting at a major historical decision zone.
Key observations:
• Price is above the 50-week SMA → improving momentum
• However, a confirmed breakout has not occurred yet
Bullish Scenario (Long-Term Breakout)
If price breaks and holds above the long-term downtrend line:
🎯 Targets
• Target 1: 4,200
• Target 2: 4,800
• Target 3: 5,500+
🛑 Stop Loss
• Weekly close back below 3,650
Rationale:
A confirmed breakout would signal the end of a structural bear market and the start of a long-term bull cycle.
Bearish Scenario (Rejection)
If the index fails at the descending trendline:
🎯 Targets
• Target 1: 3,200
• Target 2: 2,800
• Target 3: 2,400
🛑 Stop Loss
• Sustained break above 4,000
Rationale:
Rejection would imply the market remains stuck in a long-term consolidation / bearish structure.
Technical Summary
• Breakout above trendline → Structural trend reversal
• Rejection → Bull trap risk
• This is a once-in-years technical level
Brief Fundamental Outlook – China Equity Market
• Bullish factors:
• Government stimulus measures
• Attractive valuations vs global markets
• Strategic push toward domestic capital markets
• Risks:
• Property sector stress
• Slower economic growth
• Geopolitical tensions
Fundamental Takeaway:
China’s equity market offers long-term recovery potential, but timing is highly policy-dependent.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.