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The Shanghai Stock Market has been the hottest of the hot over the past year, up over 110%, which dwarfs the returns of the S&P 500 and Germany’s DAX index.
The rally over the past year put the Shanghai index at its 61% retracement level based upon the 2007 highs and 2008 lows.
As the index was hitting this Fibonacci extension level, it created a reversal pattern (wick) last week. As it was hitting this Fibonacci resistance level, momentum was reaching overbought levels only seen at the 2007 highs.
The index remains inside of a steep rising channel and this week is breaking a steep support line at (1).
Humbly, I remain of the opinion its important to keep a close eye on leadership. If the Shanghai index cools off, it could impact numerous global markets!
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