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Bulkowski’s Blog Archive: FXI

Blog Posting: February 15, 2008, FTSE/Xinhau China 25 Index Fund (FXI)

The chart shows the China ETF and it is one of indecision. In the last month, the fund has entered what looks to be a symmetrical triangle formed by two converging blue trendlines. I drew the green line along the bottom of the triangle, backward in time to the congestion area in July. Along the tops, I drew a red line. This line represents overhead resistance.

If the ETF does break out upward, then look for it to throwback at the red line especially since it coincides with the three valleys in November and December (numbered).

Aftermath

The breakout from a symmetrical triangle can be in any direction and when it does breakout, price sometimes retraces its move, dropping out the opposite side of the original breakout. That is what happened here. Price closed above the top trendline and then reversed, moving below the bottom of the pattern. On a happier note, price rebounded and when it touched overhead resistance shown by the red line, the ETF reversed, just as I predicted.