Chinese Stocks May Be Turning

AMEX:FXI   iShares China Large-Cap ETF
The iShares China Large-Cap ETF had a big run last year, then pulled back and consolidated for 3-4 months. Now it’s showing signs of coming back to life.

Notice how FXI held roughly $45 after forming a kicker candlestick on June 16-17. Looking back to the other lows of May 13 and March 25, we discover an inverted head and shoulders pattern.

Next, FXI squeezed along its 50-day simple moving average ( SMA ) for the last month. Price action the last two sessions suggests that resistance has finally been broken.

MACD has also been steadily rising since late March. Combined with the mid-May low, this has resulted in bullish divergence .

Finally, the 8-day exponential moving average ( EMA ) has crossed above the 21-day EMA . The 21-day EMA is also trying to get above the 50-day SMA for the first time since the crash in February. That could signal a more significant change of direction in favor of the bulls.

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