Impressive week for the Shanghai Composite

By any technical measure, China has been in a bearish trend for a while. But last week the Shanghai Composite Index (SHCOMP) put an impressive bullish engulfing candle on the board for the first time in a while. The last time was in June 2011 - only a 3% gain following but it did not come after an extended downturn. Prior to that was in July 2010 which did come after an extended downturn and led to a +20% gain in 4 months.

If the strength seen from last week can hold, look for an extension towards the 2200 area and bearish trendline connecting peaks from 2011. Above that would be near 2450 then the more formidable 2600 level  which is former support turned resistance from 2010 and 2011.

If the recent strength does NOT hold and the recent lows near 2000 are taken out, then look for a continuation of what has been a long multi-year bear market in China. 2012 is the Year of the Dragon in Chinese astrology, but I wonder if they have a sign for the decade? If so, then this may be the Decade of the Bear.