Thesis
The Chinese financial market, after 22 months of correction, confirmed an important bullish reversal signal.
Financial tools
Here, the iShares MSCI China equity fund ETF and, in particular, the index of Chinese stocks listed in the U.S. market-the Nasdaq Golden Dragon China Index-will be technically analyzed for the general view.
Development
First, as Figure 1 below (candlestick-type chart, time frame weekly, logarithmic-scale), in the iShare MSCI China ETF a bullish confermed Head&Shoulders can be observed, with break out of the long-term bearish trendline (with retest), reversal of the weekly Supertrend and general confirmation provided by the momentum indicator.
Such reversal movement can also be noticed in Figure 2 (candlestick type chart, weekly time frame, logarithmic scale), where the chart of the Nasdaq Golden Dragon China Index is shown.
In particular, a matured Wyckoff pattern can be seen. Breaking out of the “Creek line” would confirm a likely long-term directional move, with ambitious targets as shown in Figure 3 below (Point&Figure type chart, daily time frame, logarithmic scale).
Conclusions
Currently, the Chinese stock market, unlike the U.S. stock market, is showing clear signs of reversal, with momentum in its favor, signaling the beginning of likely bullish directionality.
Please note that the information provided is not financial advice. It’s important to conduct thorough research and consider consulting with a financial professional before making any investment decisions.
