China Markets

China has been in the news over the last week or so for different reasons. I have traded the 2 tickers FXI which is the broader market and KWEB which is the internet sector. These have been good trades over the last several weeks. I did get out of my trades 2 weeks back with the intent to get back later. I thought the price had moved too fast too soon and both looked overbought.

Starting with the basic trending:

We can see that both has retreated somewhat as both were perfectly bullish some time back.

FXI closed at 33.29 on Jan 26. Over the next 7 trading days it has fallen -8% to 30.62.

KWEB closed at 36.15 on Jan 26. Since then, it has fallen -9.8% down to 32.60.

Here is the chart for FXI. It is a bit busy but purposefully so. I wanted to add the red horizontal lines to indicate all the gaps that the price trending has left behind. These will need to be filled and there is the risk.

The thick yellow horizontal line looks like solid support. But then again, looking at the gaps along the way, the price could test the lows again.

Having said that, if it does go higher from here, 33.37 is the level I will wait for before getting back in.

Let us look at KWEB chart.

It looks a bit better than FXI. There seems to be strong support at which point price could bounce back up. There are a couple of small gaps above and number of small gaps below as well. If price bounces back up from that support line, I will get in with an upside trade.

Conclusion:

I was right to get out of my bullish trades on both FXI and KWEB. In hindsight, the timing worked out well. I will now look for the reversals as discussed above before getting back in.