Although many diversified and single-country emerging markets exchange traded funds have been solid performers this year, the same cannot be said of China, the largest developing economy. ETFs such as the iShares China Large-Cap ETF (NYSEArca: FXI), the largest China-related ETF trading in the U.S., and the Deutsche X-trackers Harvest CSI 300 China A-Shares Fund (NYSEArca: ASHR) have been struggling.

But there are inklings of upside for China ETFs, including ASHR. ASHR is the largest ETF trading in the U.S. that holds China A-shares, the stocks trading on mainland exchanges in Shanghai and Shenzhen. Earlier this month, China ETFs retreated after index provider MSCI said it is again delaying the inclusion of China A-shares, the stocks trading in Shanghai and Shenzhen, in its widely followed emerging markets indexes.

Related: China A-Shares ETFs Wait on MSCI Decision

Chinese A-Shares are a specific class of equity securities issued by Chinese companies and denominated in RMB. Under current Chinese regulations, foreign investors may access A-Shares if they are a designated foreign institutional investor or gained access through either the Qualified Foreign Institutional Investor (QFII) or a Renminbi Qualified Foreign Institutional Investor (RQFII) programs.

ASHR “declined from a high of $48.43 to a February low of $20.90. After rallying slightly off the low, the ETF has been trapped in a range between $24.30 and $22.61 since early May. Given the extreme movement which took place over the last year, if volatility returns, a breakout of this range could be significant. Just based on the size of the range ($24.30 – $22.61 = $1.69), if the price rallies above $24.30 the initial target is $25.99. If the price drops below $22.61 the initial target is $20.92. Secondary targets are $$27.30 on the upside and $19.46 on the downside. These targets are based on the larger triangle pattern which has been forming since March,” according to Investopedia.

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