Hexun Investment Advisor Liu Changsong: A-shares surge with a large positive candle, further rise will face resistance

A-shares experienced a large increase with reduced volume, first we need to understand why today’s volume is shrinking. Yesterday’s volume was high because many stop-loss orders were triggered, and there were many support orders, so yesterday all selling pressure was absorbed. Naturally, today’s volume is lower. Hexun Investment Advisor Liu Changsong believes this kind of volume contraction is normal. But why is it a medium-sized positive candlestick? The Shanghai Composite Index has not closed yet, and it’s up at least 0.6%, which doesn’t qualify as a medium-sized positive candlestick. However, the Shenzhen Component Index is up over 2%, the ChiNext Index up over 3%, the STAR Market 50 Index up over 2%, and the average stock price index up over 2.5%. Over 4,000 stocks are rising. Would you say this counts as a medium-sized positive candlestick? Some say this medium-sized positive candlestick has little relevance to me because my position hasn’t moved much. It’s all about the structure—this is still a rotation structure.

From the overall structure perspective, whether in Shanghai or Shenzhen, it’s a box-range movement. Until there’s a valid breakout above the upper boundary of the box, there’s no room to go higher, but it’s impossible to break below the 4,000-point level. When there was a big drop earlier, I said 4,000 points wouldn’t break, and people mocked me. Now, how about that? What about short-term views? On the 60-minute chart, there’s a bullish divergence at the bottom, a double bottom on the 60-minute level, forming a small double bottom structure. Above the 5-day moving average, the target is around 4,197 points, even challenging 4,200 points. The directional structure and rhythm—this has been discussed continuously. If you watch each video carefully three times, you’ll understand naturally. Many people say I don’t talk about direction, but even if I do, you might not understand. So if you don’t understand this area, influenced by news and emotions, your mindset will be unstable, making you confused—sometimes feeling uncomfortable, sometimes cutting losses, and at high levels chasing the rally again.

Therefore, after improving your understanding, your mindset will improve. Of course, tomorrow still has technical reasons to push higher. The 60-minute bottom divergence and the double golden rebound cycle—you should know the timing cycle. If tomorrow continues upward, you shouldn’t chase blindly. If it pushes further, there might be oscillations. Because today’s rise and fall have reached a boiling point in the sentiment indicator. We see that a pullback is still a good entry point, but the rhythm must be controlled. First, the structure of the Shanghai Composite Index is a box structure. Does it matter if there’s news? It still moves within the box. Why? Because the current market needs stability, and this box structure is suitable. How to view the rhythm? The rhythm is similar to the previous wave. So now, on the 5-day moving average, it’s oscillating and rebounding. If there’s stagnation, there will be a stepping action. This stepping must pass the W-bottom neckline. The W-bottom is a small double bottom, visible on the 60-minute chart. This small double bottom is very stable. The 60-minute divergence combined with the small double bottom structure, breaking the neckline, indicates a potential upward move. After crossing the entry point, there could be a retest and then a similar-length upward move. News will only affect short-term fluctuations and short-term rhythm, not the overall trend. It won’t change the monthly oscillating upward structure. A few months ago, without news, it was still oscillating upward along the 5-month moving average. That’s the Shanghai Index. Shenzhen is stronger than Shanghai, mainly because oil and gas are concentrated in Shanghai. Today, Shenzhen’s rise is a medium-sized positive candlestick. Has this structure changed? No, it remains within a box. My view is that the bottom of this box will not break.

As for the top of the box, whether it can break through depends on market attitude. If the market remains stable, it will be a slow oscillation—stable and improving. From a technical perspective, on the 60-minute chart, there’s divergence at the bottom, and a double golden rebound. Pay attention to the area around 80 on the 60-minute chart. If it pushes higher, the 30-minute and 15-minute charts might see a double dead indicator correction. The probability exists. So if it pushes higher tomorrow, don’t chase blindly. Wait for a pullback to see if there’s an opportunity. Let’s look at the average stock price. Today’s average price increase is significant, currently up 2.44%, and the market is at 2:30 before close. Structurally, today’s rise and fall ratio sentiment indicator has reached a boiling point. Tomorrow, the ratio and sentiment indicator still look good, and if it continues upward, it will remain positive.