Chinese Equity Markets Soar on Investor Optimism – Cycles Point to a Bullish Pause

Steve Miller

The Shanghai Composite rallied 5.7% in Monday’s trading session as China’s state-run Securities Journal noted the importance of a healthy bull market to the Chinese economy.

This news sent both the iShares China Large Cap ETF NYSEARCA: FXI and Baidu NASDAQ: BIDU soaring in the U.S. session.

As of 1:30 PM ET, FXI is up 8.7% and BIDU is up 6.9%.

In this blog post, we will review our weekly cycle analysis for both FXI and BIDU.

iShares China Large Cap ETF (FXI) Weekly Chart

fxi shares china etf bullish market cycles analysis outlook image july 6

askSlim Technical Briefing:

The weekly analysis suggests that FXI is in a positively configured cycle.

The next projected low is due in the middle-to-end of August. Weekly momentum is firmly positive.

fxi ishares china stocks etf bullish forecast analysis indicators image july 6

On the upside, there are prior cycle high resistances from 45.29 – 45.96.

On the downside, there is a rising intermediate-term support at 42.27 followed by another zone of support from 40.52  39.10. For the bears to regain control of the intermediate-term, we would need to see a weekly close back below 37.69.

askSlim Sum of the Evidence:

FXI has a bullish weekly cycle pattern with positive momentum. Given these conditions, we would expect downside to be limited to the rising intermediate-term supports beginning at 42.

Baidu (BIDU) Weekly Chart

bidu stock price analysis bullish market cycles outlook image july 6

askSlim Technical Briefing:

The weekly cycle analysis suggests that BIDU is forming an important base.

The next projected intermediate-term low is due in early-to-mid August. Weekly momentum is positive.

On the upside, there is an intermediate-term Fibonacci resistance at 133.39.

baidu stock bidu bullish forecast analysis indicators image july 6

On the downside, there is a rising intermediate-term support at 120.35 followed by another zone of support from 113.02 – 107.10.

For the bears to regain control of the intermediate-term, we would need to see a weekly close back below 101.17.

askSlim Sum of the Evidence:

BIDU has a bullish weekly cycle pattern with positive momentum. Given these conditions, we would expect any downside to be limited to the rising intermediate-term supports beginning at 120.

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