Most Traders Miss This Bullish Pattern
Here’s an opportunity to diversify outside of the U.S. markets.
ETFs that track country indexes enable us to easily take advantage of trends that may not move in the same direction as the U.S. markets.
In early January I highlighted China’s ETF (FXI), at $40 and it’s now trading around $45.
Here’s another opportunity in a country ETF with a pattern that most trader miss.
On Friday Italy’s ETF (EWI) made a new swing high which confirmed a breakout over the 200-day moving average.
There is also another bullish pattern that suggests this is a good trade and most traders probably don’t know to look for it. This pattern is that the 50-day moving average is about to move higher than the high of the October – February base that EWI broke out of in February.
The high of the base was around $26.30, and the 50-day moving average is about $26.20.
Additionally, the recent pull back from the 200-day average stopped at $26.57 which is higher than the base breakout. This suggest that even if this breakout of the 200-day average is tested, it should hold above its recent $26.50 swing low.
Therefore, a good place for a stop is under $26.50 until the 50-day moving average is higher. Then the 50-day average can be used as a trailing stop.
The trade entry is between $27.00 – $27.65.
The slope on the 200-day is still strongly down so it’s likely there will be an opportunity to enter for less than $27.65.
However, if it trades back below $27 the breakout is suspect, so I would not enter under that level.
Rick Nartarian, Chief Investment Officer
The American Investor Daily