Is MCHI worth investing at the current levels?

[iwantmoney]

[Rakesh Upadhyay]

The Chinese market has been in focus due to the ongoing trade war with the US that can hurt the economy of both the countries in the long-term. If a favorable deal for both the nations is hammered out, it is likely to be positive for the stock markets of both nations. So, let's see if MCHI looks good to be purchased?

On the weekly chart, the ETF is close to the downtrend line of the falling wedge. The 20-week EMA has turned up and the 50-week SMA is also flattening out. This shows that the bulls have an advantage in the short-term. 

The ETF fell to a low of $50.45 in end-Oct. and successfully retested this level in end-December when it fell to a low of $50.86. This completed a double bottom formation when the ETF rose above the overhead resistance of $59.16. The minimum target objective of the double bottom is $67.46. We, however, expect the rally to reach $72 levels.

It can be purchased at $64 with a stop loss below $58 because if the price sustains below $59.16 for long, it can result in a retest of the Dec. lows. However, as the risk to reward ratio is not very attractive, I would suggest you keep the position size at 30% of the usual.