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Fan Yang

Chinese Large-Cap ETF (FXI) Getting Ready to Breakout

The iShares FTSE/Xinhua China 25 Index or $FXI, has been turning things around after a bearish 2018. As we can see on the daily chart, price has completed a double bottom. 

FXI Daily Chart

(click to enlarge)

Double Bottom:
- In 2018, FXI came down from a high of $54 to a low around $38, where it eventually completed double bottom.
- The break above $43 in February of 2019 was the breakout that confirmed the double bottom. 
- Also note that during this bullish swing, price broke above a falling trendline as well as climbed above the 200-, 100-, and 50-day simple moving averages.
- Finally, the RSI also pushed above 70, which signaled initiation of bullish momentum.
- However, price stalled around $45.25, and consolidated for a little over a month.
- Price is again knocking on $45.25 resistance. So far, the market has maintained the bullish bias during this consolidation.
- I think the price chart shows a strong likelihood that the FXI will push higher towards at least the $47-$48 area, which represents the consolidation highs from March to June 2018. 
- For now, I would limit the upside to $50. 
- I think from there, we might see some consolidation with downside back to $46. 
- It will take a break below $42 to invalidate the bullish breakout and the potential extension towards $50.


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