I love these setups, as they can really turn a stock into a hire flier, remember Intercontintental Exchance (ICE) anyone? We called that for over 22% gains! Now today we are looking at a chart of the tracking fund for the FTSE/XINHUA China 25 Index (FXI), and are seeing potential here.
What really needs to be taken note of is how the fund has found support near or at its 50 DMA over the last two months multiple times, and as a result has had higher lows each drop. The declining volume is another big sign that a move one way or another may be around the corner. Lastly, look at the MACD below the chart, check out the move down towards almost 0, and it seems we may be in for an uptrend beginning which is signified by the black line crossing ontop of the red.
Buying into FXI isn’t too tough, just wait until the stock pushes back past $110 on very strong accumulation volume. You could also potentially buy in with the next break above $108, but that would be slightly more risky. If the fund falls below its 50 Day Moving Average, or 50 DMA, on high volume then the pattern is shot and I would stay away.
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