The iShares MSCI China UCITS ETF opened with a negative gap on Monday, falling below the upside support line drawn from the low of December 18th. In our view, this has changed the short-term outlook to a negative one.
The price may continue sliding and perhaps initially target the 6.68 barrier, which is marked as a support by the highs of February 3rd and 5th. That said, a break below that hurdle may be needed for larger declines to materialize. If indeed that barrier breaks, we may see declines towards the inside swing high of February 1st, at 6.55, the break of which may trigger extensions towards the low of January 28th, at 6.42.
Taking a look at our short-term oscillators, we see that the RSI, already below 30, shows signs that it could turn down again, while the MACD lies below both its zero and trigger lines, pointing south as well. Both indicators detect strong downside speed and support the notion for further declines in this ETF.
On the upside, we would like to see a rebound back above 6.83 before we start examining whether the buying interest has risen sufficiently. This would also place the price back above the aforementioned upside line and may open the path towards the 6.96 level, marked by the low of February 19th. A break higher may encourage investors to aim for the peak of that day, at around 7.07.
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