Triple Timeframing the Breakout in China FXI

Apr 9, 2015: 1:31 PM CST

Blink and you missed this week’s surge breakout higher in previously stable FXI, a popular ETF that tracksthe China 25 performance.

Let’s drill-down on the breakout from the Monthly Chart (open air) down to the Daily Levels to watch now:

The Monthly Chart above may give the clearest perspective of where the ETF has traded and where it may be headed in the future.

Namely, price (shares) found resistance into the $40.00/$42.50 key level from 2009 to present.

In 2015, price initially broke above this level and buyers continued fueling the price higher.

According to the chart above (StockCharts.com data), the prior high ahead of the 2008 Financial Crisis was above $60.00 per share, a possible reaction target should the buying pressure accelerate even faster (note 2007 for a historical precedent of skyrocketing prices).

We’ll monitor lower frames for risk and position management in an overheated swing:

Similarly, shares initially traded through the $40.00 barrier in mid-2014 only to retest the midpoint.

The second breakout- December 2014 – led to a continuation move albeit on lower volume and momentum into 2015.

However, buyers are currently propelling the ETF value higher with the gap and breakthrough of $44.00.

The Daily Chart shows the short-term resistance target at $44.00 – following the $40.00 breakout – and the one-sided (unidirectional) surge that’s both a short-squeeze and a power-buy outcome.

For most traders, this move is too mature/late to join in now – the risk of a pullback is high – but aggressive traders can press their luck above $50.00 per share, using it as a stop-loss pivot.

China’s ETF may yet strengthen but if you miss an initial breakout, it’s often a better decision to wait for the first pullback to put on a bullish position.

Whether you’re trading this name or just watching it out of curiosity, focus on this surge and the immediate action over the next couple of weeks.

I’m excited to announce that I’ll be joining six other great speakers at a Two-Day intensive boot camp in May!

Check out the details and start planning the trip today to join us in May.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

Comments Off on Triple Timeframing the Breakout in China FXI

Comments are closed.