However, the large future space of the index does not mean that the market will likely break through the resistance area of 2850 points and then re-search for support at 2750 points. This is a reverse logic consideration. Before, everyone was waiting to buy when it adjusted below 2750 points. But after the market strengthens, it generally won't easily give such opportunities to those waiting outside the market. During this period, or when the index rises above 2850 points and readjusts downward, it may stop at 2780 points without going further down. We need to know that the reason for such repetition is not to let the position of the 20-day moving average be too far from the index. In other words, the market is waiting for the upward shift of the 20-day moving average in the midst of fluctuations. Understanding these makes it clear that a single interest rate hike will not change the upward trend of the market. Not only from an expectation perspective but also the actual trading trends are like this. Although there are many resistances above 2800 points, the lowest point of the big yang line on July 4th, 2770 points, has never been effectively broken, which means that the adjustment around a week is a strong adjustment, repairing the overly high indicators on the hourly chart. Therefore, the possibility of directly adjusting to 2750 points in the short term is very small.
Facing this brief complex situation, we first need to understand what factors dominate the general direction of the market. Without doubt, it is still the monetary policy. From the previous series of phenomena, the monetary tightening situation may gradually ease in the second half of the year. Of course, this easing does not mean obvious relaxation, but rather no further tightening under the current circumstances, which is what the market needs. With this change, the worries of the market will gradually dissipate, and people's expectations for the future will not be so fearful.
The Shanghai Composite Index feels a bit weak rising to above 2760 points, especially above 2800 points, where it struggles even more. And it has been in a lateral consolidation for nearly a week at this level. This is exactly the time when both bulls and bears are quite tangled. The bulls think this is just a short-term pressure digestion, and it will continue upwards afterward. The bears, however, believe it needs to re-probe at 2750 points or even 2720 points before re-crossing the major resistance zone at 2850 points.
From this perspective, it can be assumed that the sentiment of the market will gradually improve. It is important to rationally see this in the second half of the year. Because it is unrealistic to define simply by the clarification of monetary control signals. Now our inflation will continue, and the CPI in June reached 6.4%, which is expected to reach such results. Starting from July 7th, the central bank raised the benchmark interest rate again by 0.25%. So, many people are a bit panicked: wasn’t it said that the tightening policy had come to an end? Why did it start again? To me, this is purely routine for the central bank. You can analyze why, despite continuous adjustments to the currency this year, the CPI keeps rising. This means that price increases cannot be solved solely by monetary tightening. Therefore, this interest rate hike can be seen as the central bank's stance rather than the continuation of substantive tightening policies.
Mengfa: After reaching 2850 points, there will be another probe process.
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