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Lot of Airsopace Below China FXI ETF

Companies / Chinese Stock Market Jan 27, 2010 - 01:53 PM GMT

By: Guy_Lerner

Companies

Figure 1 is a weekly chart of the i-Shares FTSE Xinshua/ China 25 (symbol: FXI).


Figure 1. FXI/ weekly

Before breaking down FXI, let me set up the chart. The pink labeled price bars are negative divergence bars between price and an oscillator that measures price, and as we know, a cluster of these negative divergence bars is consistent with waning price momentum. The red dots are key price points, which are points where buying and selling are most likely to take place.

FXI essentially found resistance at the $42 level. This was the prior area of breakdown back in August, 2008. Technically, this was noteworthy in that it was a break below 3 key pivot points. So for the most part from the lows in March, 2009, FXI has retraced all the way back to its break down point. $42 is also the area where slowing upside momentum appeared, and it was at this price level that negative divergence bars started to show up. As we know, a cluster of negative divergence bars has been associated with market tops. FXI did go slightly higher but has since broken down and it is trading back below the $42 level. $42 was support, and it is now resistance.

Below $42, there is a lot of air space or no area of natural support. In fact, the next level of support comes in at $32, which is the breakout point of the October, 2008 to March, 2009 base. At this level, this is an ideal buying opportunity.

    By Guy Lerner

      http://thetechnicaltakedotcom.blogspot.com/

      Guy M. Lerner, MD is the founder of ARL Advisers, LLC and managing partner of ARL Investment Partners, L.P. Dr. Lerner utilizes a research driven approach to determine those factors which lead to sustainable moves in the markets. He has developed many proprietary tools and trading models in his quest to outperform. Over the past four years, Lerner has shared his innovative approach with the readers of RealMoney.com and TheStreet.com as a featured columnist. He has been a regular guest on the Money Man Radio Show, DEX-TV, routinely published in the some of the most widely-read financial publications and has been a marquee speaker at financial seminars around the world.

      © 2010 Copyright Guy Lerner - All Rights Reserved
      Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

      Guy Lerner Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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