While the U.S. market continues 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 MSCI Japan ETF ((NYSE:EWJ) going back the last twelve months. After breaking above prior resistance around $12.20 earlier in the year, 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—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; 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.