Coronavirus pandemic in China is far from over. While the number of new daily cases moderated recently, restrictions remain in place creating a drag on the economy. Mass testing is being carried out in more and more cities to identify Covid hotspots. Economic damage from such an approach will stretch beyond China due to the country being an industrial superpower. Nevertheless, Chinese authorities defend its “zero-Covid” policy and do not signal willingness to change the approach. However, a strong upward move could have been spotted across Chinese during today’s Asian session as the Chinese Politburo stepped in. Executive committee of the Chinese Communist Party said that it is ready to provide more stimulus to support the flailing economy and said that full-year economic targets will be achieved. This was enough to provide a lift for Chinese indices, like CHNComp.
Taking a look at CHNComp chart at D1 interval, we can see that recent pullback was halted near the 61.8% retracement of the upward move launched in mid-March 2022. A strong upward move that occurred today pushed the index back above the 38.2% retracement in the 7,200 pts area, that also served as a lower limit of a brief sideways move in the second half of March and the first half of April. The first near-term resistance to watch can be found in the 7,650 pts area, where the upper limit of the aforementioned trading range can be found.