Sunday, July 31, 2016

EEM Emerging Markets Weekly Chart Inverted H&S

Over the last couple years, emerging markets were taken out back to the shed and beaten severely. As the year began, however, the possie d (green lines) said a healthy bounce is at hand, which occurs. EEM is a strong play this year and as price moves higher, the blue lines show the textbook inverted head and shoulders pattern in play. The head is at 28 and thick neck line at 34.5, a difference of 6.5 so the upside target is 41.0 (34.5 + 6.5). The thinner blue neck line is at 35.5, a 7.5 difference, so the upside target is 43.0. Those targets match up nicely with overhead price resistance levels.

The 200-week MA at 37.59 is key. Price has broken out above both necklines for the H&S pattern. Typically, price will retreat for a back kiss of the neck line (brown dots) before bouncing and heading higher again. Another potential play is waiting for price to come back up after a pull back and as soon as it overtakes the current price at 36-ish, blue dot, that would be a buy point. If price collapses back under the neck lines and under that 32.5 support, the inverted H&S pattern may be nullified and emerging markets may tumble lower as traders run for their lives.

The red lines show neggie d so that will send price lower in the near term for a few days or week or two, but the RSI and MACD are long and strong wanting to see higher highs with price after the pull back. This scenario jives with the brown dots and the positive bullish outcome with the inverted H&S leading higher. So the idea is that EEM is an attractive buy but not right now. Give it a few days or so sine it should pull back. Look for a pull back to the brown dots as a potential entry. If EEM moves above the blue dot and current prices it may run like a mad man to the 200-week in a flash. Keystone does not own a position in EEM currently. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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