While the U.S. markets continue to figure out its own identify, whether it’s meant to spend the next few months as a bear or a bull there are some interesting chart setups taking place in a couple international markets. Today I’m going to take a look at one foreign market specifically, Japan.
Below we have a daily chart of the iShares Japan ETF ($EWJ) going back the last twelve months. After breaking above prior resistance earlier year around $12.20, Japanese equities have had a nice run, up about 10% to its YTD high. We’ve seen continued pushes in momentum into ‘overbought’ territory, which as I’ve said previously on the blog – this is typically a good thing. It shows a healthy sign of buying.
However, recently a possible double top has been created as $EWJ tried to re-take its April high last month but was unable to do so. While making a run back to $13.30 the Relative Strength Index (RSI) put in a lower high, a sign that momentum was not confirming the advance in price and had begun to weaken.
Since then price has fallen back to its prior low just under $12.80 and could possibly head even lower. What I’ll be watching with this Japanese ETF is if it can find support at its 100-day Moving Average and if not then price could find itself back at the level that had been resistance in 2014 at $12.20. If price is able to hold above $12.80 then we may see a continuation of the current trend and another attempt to set a new high. I’ll let price lead the way.
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