For another interesting Chinese stock, we're looking at the mobile phone manufacturer Xiaomi, trading on the Hong Kong Exchange. Hence, we're dealing with the Hong Kong Dollar, not the US Dollar. Overarchingly, we are also in a Wave III here. Wave II concluded its correction with a double bottom at HK$8.28. This chart adheres well to the Elliott Wave structure, showcasing many patterns that align well. Currently, we believe we are in a subordinate Wave 3, having completed the subordinate Wave ((ii)) between the 61.8% and 78.6% levels. Unlike other stocks, we aim to place a market entry here, as we anticipate that we should not fall below the 78.6% level. Else we could come back to the low of 8.28 HKD.
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Reviewing our entry in Xiaomi reveals it has been quite successful thus far; the stock rose to a peak of 33% 🚀, encountering a significant gap that we have now almost closed. We anticipate a potential minor downtrend in the coming days, followed by a continuation of the upward trend. The momentum at Xiaomi seems promising. Our entry less than a month ago has seen a remarkably positive response, and we do not expect the price to fall below the level of Wave ((ii)). However, we will maintain our current stop-loss position, expecting, as mentioned, to still be in the overarching Wave III. This suggests a significant upside potential with relatively low downside risk. We will keep you updated, but currently, most Chinese stocks appear to be on a good trajectory and showing signs of recovery.