The 'Dow Jones of China' is About to Reach a Bargain Level: iShares China Large-Cap (NYSE: FXI)

Trading stocks is often an exercise in pattern recognition. Certainly, this is how the chartists earn their keep, as charts will often tell you much of what you need to know about the potential future of a stock or ETF.
I say "potential" because no prior pattern in a chart guarantees a future outcome. And while nothing in the investing game is guaranteed, smart traders can put the power of probability, logic and past patterns on their side.
The pattern that's jumping out at me right now is in the iShares China Large-Cap (NYSE: FXI).
This ETF tracks the FTSE China 25 Index, which is comprised of 25 large-cap Chinese equities that trade on the Hong Kong Stock Exchange. Think of FXI as the Dow Jones Industrial Average of China. Its top holdings include Tencent Holdings, China Construction Bank and China Mobile.
As you can see in the chart below, over the past two years, shares have been on a roller-coaster ride.

While the price action may seem a bit schizophrenic at first, a pattern emerges upon a closer look.  (more)
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