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As an investor, staying ahead of the latest market news and trends is crucial to making informed decisions. Recently, China’s central bank made a significant move by revealing its most aggressive stimulus since the pandemic, causing the Shanghai Stock Exchange Composite Index to soar by over 4%. This news also had a positive impact on the iShares China Large Cap ETF (FXI), which saw a surge in trading volume.
But the question remains – is it too late to buy into FXI after such a massive move? While the ETF opened 6% higher from the previous day’s close, reaching its May 2024 high point, it’s important to look beyond the short-term fluctuations and analyze the long-term trends.
Looking at the weekly chart of FXI, we can see a more encouraging technical picture. Despite facing a three-year downtrend, the ETF has shown signs of a potential bullish formation by making higher lows and attempting to break through key resistance levels. A breakout above the $30 mark could set FXI on a path towards the $38 zone, reaching its highest level since early 2022.
To assess the long-term momentum shift, we need to monitor the key moving averages and the Relative Strength Index indicator. Observing the moving averages beginning to slope higher and the RSI staying in the upper half of its range are positive signs for FXI’s future performance.
Historically, FXI has experienced strong multi-month and multi-year rallies when breaking above downtrend lines. If the ETF can sustain its current momentum and break through the $30 mark, traders may witness a significant uptrend similar to past rallies.
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