The action in the ProShares FTSE/Xinhua China 25 Stock Index ETF (FXP) since mid-June exhibits a series of lower-lows in price, higher-lows in momentum (RSI), and declining volume into weakness, all of which are warning signals that the current downtrend in the FXP is extremely stressed – and ripe – for a period of countertrend movement.

Based on the current technical set-up, the FXP is heading for a confrontation with the Jun-September resistance line, now at 10.35, which should be hurdled on the way to a test of much, more important resistance at 11.44. If that level is hurdled and sustained, the upside projection points to 13.00/30.

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.