Shanghai Composite Analysis: ASHR Proxy Tests 33.77 Resistance

The Shanghai Composite, viewed through the ASHR proxy lens, demonstrated a relief extension during the January 22nd session as market volatility receded and duration found a bid. This stability-driven move suggests a transition from policy sensitivity toward positioning inertia, provided cross-asset alignment remains intact.

Market Sentiment and Proxy Tape Dynamics

During the Asia-to-Europe handover, the tape reflected a cautious but constructive tone. Participation broadened significantly during the New York morning session as US cash liquidity improved follow-through, particularly in high-beta pockets. The move lacked a "panic" signature, which suggests a lower probability of a V-shaped reversal but highlights the necessity of price confirmation for continued upside.

Cross-Asset Correlations

Risk appetite was bolstered by a softening US Dollar (UUP -0.48%), providing a marginal tailwind for non-US equities. Interestingly, strength in metals (GLD +1.82%, SLV +3.83%) suggests that while risk sentiment is improving, residual hedge demand remains active in the background. Meanwhile, the easing of volatility (VIXY -1.74%) has reduced hedging friction, making beta easier for institutional participants to hold.

Technical Frame and Key Price Levels

The technical structure for the Shanghai proxy is currently defined by tight handles and clear invalidation bands. Traders are encouraged to treat the first breakout as information and the second as confirmation.

• Immediate Resistance: 33.77 and 33.80.
• Pivot Support: 33.70 followed by 33.62.
• Invalidation Zones: Moves beyond 33.82 or below 33.57.

Scenario Grid for January 22–24

The base case (57% probability) anticipates the market holding its current range with a slow upward grind, assuming volatility remains offered. An upside extension (20% probability) would require clear acceptance above 33.77, targeting 33.82. Conversely, a downside break (23% probability) below 33.62 would signal a shift toward 33.57, invalidated only by a quick reclaim of the 33.70 pivot.

Watchlist and Execution Strategy

For those looking at tactical entries, two primary setups are emerging based on the current flow:

Pullback Long Setup

An entry near the 33.74 level with a stop placed at 33.56 offers a disciplined risk-reward profile, targeting the 33.77 and 33.82 resistance levels over a 1–3 day horizon.

Breakout Confirmation

Aggressive participants may look for a breakout add on a move above 33.77 (entry 33.78), utilizing a stop at 33.69 and targeting a move toward 33.87 or 33.97.

Related Reading: Shanghai Composite Analysis: Index Slides on Policy Risk Repricing