Today’s chart illustrates how the Chinese stock market went parabolic from mid-2005 until late 2007. China’s boom was immediately followed by a financial crisis induced bust with the Shanghai Composite Index plunging 72% in a little more than one year. Unlike what occurred stateside, China’s post-financial crisis rally was relatively short-lived (only nine months). Over the past three years, the Shanghai Composite Index has traded within the confines of a relatively steep downward sloping trend channel. Over the past month, the Shanghai Composite has worked its way higher to where it is testing resistance (red line) for the 7th time since early 2011.

Source: Chart of the Day.