Three Things To Watch For In Emerging Markets
Dragonfly Capital | Jan 29, 2019 08:36AM ET
Investing in Emerging Markets has been a hot topic lately. This after a year long decline in 2018 that saw the Emerging Markets ETF drop over 25%. Is it just a reversion to the mean trade? For some it is. But there are some very interesting things going on in the price action that bear watching.
The chart below shows the Emerging Markets ETF, $(NYSE:EEM), since its peak in January 2018. There was the quick pullback to long term support when the broad markets fell and then the bounce. But unlike the U.S. markets, they did not rebound and retest the highs in September. Instead the Emerging Markets ETF just kept sinking, making a low at the end of October.
The bounce that followed failed at falling trend resistance and price reverted to the lows. And this is where the story gets interesting. The fall stopped at a higher low. Eyebrows were raised. Since then the price has pushed up through that trend resistance, retested it as support and continued higher.
This puts Emerging Markets in the spotlight and highlights three things to watch for in the chart. The first is the December 1 high. Price marginally broke above this level Friday but did not hold at the end of the day. A hold above would be a higher high to go with the higher low, the possible start of a reversal.
The second is the RSI moving up over the 60 level. Holding here, in the bullish zone at levels not seen since January last year is a big shift in momentum. The third item is the 200 day SMA. Price has not maintained above it since May. A move over the 200 day SMA, along with the other two characteristics, would attract a lot of buyers.
Disclaimer: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Original post
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.