China SSE Composite has been forming an 8 month-long rectangle chart pattern. Over the past two weeks the index breached the upper boundary of its multi month-long rectangle chart pattern standing at 3,300 levels. The daily close above 3,350 levels confirmed the breakout with a possible chart pattern price target of 3,560 levels. Breakouts from chart patterns with horizontal boundaries are reliable. After a confirmed breakout, resistance becomes support. Strong support for the index now stands at 3,300 levels. Positive momentum in Chinese equities can boost Emerging Markets performance. (Learn more: Video Tutorial – Rectangle [1])
Tech Charts members were alerted to the bullish chart pattern breakout signal and the developing strength in the Chinese equities in the Interim Update of July 13, 2017. The report discussed the strong price action on the iShares China Large Cap ETF (FXI [2]). With the completion of the 8 month-long bullish rectangle on the SSE Composite index (benchmark for broad market performance), strength in the Chinese equities can be seen in small and mid-caps as well as large-caps. The two charts below show the FXI at the time of the breakout alert (left) and with this week’s updated prices (right). FXI has a possible chart pattern price target standing at 50.25 levels.
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