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Friday, March 26, 2010

This market is about to make an explosive move

Everything is lining up for an explosive move in Chinese stocks...

[The Shanghai Stock Exchange] peaked on August 2, 2009, and then plunged more than 20% over the next four weeks. Since then, Chinese stocks have mostly waffled back and forth, forming a series of higher lows and lower highs.

This action creates a "consolidating triangle" formation on the chart, where the support line is rising while the resistance is falling. Eventually, the two lines come together and the stock is forced to break out or break down from the pattern.

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