The Chinese National Health Commission announced a major easing of Covid curbs in the country today, including some restrictions that were in place for a long time. Asymptomatic patients as well as those with mild symptoms will now be allowed to self-quarantine at home instead of being moved to centralized quarantine camps. Negative Covid tests will no longer be required for cross-country travels as well as in most public venues. Movement restrictions in non-high risk zones will be removed while Chinese authorities will be more precise about what is a high-risk zone (rather than locking down whole communities). This is a major shift away from a strict Covid-zero policy that has been in place in China until now and sign that economic damage stemming from these policies as well as a social unrest triggered by them are a risk to CCP.
However, as media reports on easing of Covid restrictions have been making rounds for weeks now, the announcement triggered some profit taking. While Chinese indices, like CHNComp, jumped in a knee-jerk move, those gains were quickly pared and the index turned lower.
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Open account Try demo Download mobile app Download mobile appTaking a look at the CHNComp chart at D1 interval, we can see that the index tested 200-session moving average today (purple line) but failed to break above. Index started to pull back after a failed test and is now trading almost 5% below daily high! However, there is still some room for declines to deepen until important support level are reached. The first such level can be found at the 23.6% retracement of a recent upward impulse (6,350 pts) while the second, and a more important one, can be found at a lower limit of a local market geometry (6,175 pts).
Source: xStation5
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