Shanghai, China’s financial hub, has been experiencing an unprecedented melt-up in the stock market. The latest breakout has pushed the RSI (Relative Strength Index) to an astonishing 81, signaling a strong and sustained uptrend. However, this level of overbought momentum can be deceiving, as it may stay overbought for longer than anticipated.

The 17 consecutive sessions without a bearish candle is a remarkable feat, considering the historical volatility of the Shanghai stock market. This prolonged period of upside has led to increased optimism among investors, with many expecting the rally to continue unabated. However, it’s important to remember that markets can be unpredictable and prone to sudden corrections.

Technical analysts are closely monitoring the RSI levels, looking for signs of potential reversals. While the current reading of 81 may seem daunting, it’s essential to understand that overbought conditions can persist longer than expected. In fact, some historical data suggests that overbought readings can stay in place for extended periods, providing a false sense of security among investors.

Investors are advised to exercise caution and maintain a healthy dose of skepticism when interpreting the current market conditions. While the Shanghai stock market has shown remarkable resilience, it’s crucial to remember that no trend lasts forever. It’s essential to stay informed and adapt to changing market dynamics to avoid costly mistakes.