China.

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Many of my friends who invest know that I’ve been bullish on China for the longest time. Has that sentiment changed? Not really.

In this newsletter, I outline the technical outlook of 2 tickers: KraneShares CSI China Internet ETF (KWEB) and Alibaba (BABA).

KWEB appears to have gone nowhere for the past few years. However, it has progressively been making higher lows and higher highs. The rounding bottom pattern largely resembles the one from 2014-2017.

If we zoom into the recent action, we can see that KWEB has been consolidating in a pennant:

If we only consider the full body candle closes, then we can argue that KWEB has broken out of consolidation and retested its breakout. A red bullish candle showed up 2 weeks ago as KWEB broke out of its pattern, while the stochastic oscillator inches towards extreme overbought conditions.

A breakout should see KWEB fill the 39-43 imbalance over the next 1-2 months.

At what point could this move be a false breakout? Only if KWEB fails to hold the 32-33 area, which could see a retest of pennant support. Otherwise, the dip is likely to continue being accumulated by institutions.

Likewise, BABA is in the same rounding bottom setup seen from 2015-2017. There has been some interesting developments on the weekly chart:

BABA was consolidating in a pennant for several months, but broke out of the consolidation pattern last week while forming a red bullish candle and forcing a bullish stochastic crossover. Interestingly, BABA retraced 78.6% of both highs it made while trading within the pennant.

This week, BABA has spent time retesting its breakout from above, which can be seen from the daily chart:

Once BABA breaks over the tricky 120-122 resistance, which has been sticky for several years, the rate of the uptrend is likely to accelerate. I will not be surprised if BABA decides to run all the way to the 1.618 Fib extension of its move from 80.06 (Jan’25 swing low) to 148.43 (Mar’25 high) at 190.68.

That suggests a 58.8% upside move over the next few months. Is this a recommendation to buy or sell? No.

But I am just outlining what could possibly happen. Considering the rounding bottom → prior ATH → slight pullback → new ATH recovery formula of household darlings which experienced massive drawdowns such as Robinhood (HOOD), Palantir (PLTR) and even Pop Mart (HKEX: 9992), China could very well be next.

Keep your eyes peeled, as always.

$Alibaba(BABA)$ $KraneShares CSI China Internet ETF(KWEB)$ $PDD Holdings Inc(PDD)$ $Baidu(BIDU)$ $iShares China Large-Cap ETF(FXI)$

@TigerWire @TigerStars @CaptainTiger @MillionaireTiger @TigerEvents