Japanese Equities Create A Possible Double Top

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.


Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

About Andrew Thrasher, CMT

Andrew Thrasher, CMT is a Portfolio Manager for an asset management firm in Central Indiana. He specializes and writes about technical analysis as well as macro economic developments.