FXCM’s big China tech basket (CHN.TECH) comprises:

  • Alibaba
  • Tencent
  • Meituan
  • Xiaomi Corp

It has benefitted from signals that China’s regulatory clampdown of tech is being relaxed and from the loosening of China’s strict Covid-19 regulations.

CHN.TECH charted a distribution pattern between January and July 2021, following which its price broke down. Then, the basket traded below its 30-week exponential moving average (EMA) with the EMA pointing down. During this period, its RSI traded below 50 (orange rectangle), connoting the underlying bearish momentum.

However, between September and November 2023, in anticipation of the relaxation of controls, CHN.TECH charted a rare and swift V-reversal (green rectangle). The basket is now trading above its 30-week EMA, and the EMA has turned up. In addition, the RSI has moved to the bullish side of 50 (blue rectangle), suggesting a potential mark-up phase. The longer the RSI maintains this position, the greater the likelihood of further price appreciation.

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