Charting the Wide Range for Emerging Markets EEM

Jan 28, 2014: 11:51 AM CST

Emerging Markets have been in the news lately with respect to a sharp sell-offs in country ETFs.

Let’s take a broader picture view of the popular ETF symbol EEM – iShares Emerging Markets fund – and chart the key pattern at work on the higher frame.

EEM Emerging Markets iShares Weekly Chart Rectangle Price Pattern

In TradeStation we can see the broader “Rectangle” Price Pattern that has clearly developed between the $35.00 and $45.00 per share level.

We can get more specific (such as $36) but we’ll use this $10.00 wide-range reference level to define the boundaries and trading strategies while price remains within this larger pattern.

While the US Equity Indexes recently traded into all-time highs (certainly well-above their 2009 levels), the EEM fund actually trades near a key level seen in late 2009 – and it’s bounced up off this level various times since then.

The “Midpoint” or Value Area of the Rectangle Pattern is $40.00 per share for the fund, and price currently trades near the $38.00 level or rising shorter-term trendline as drawn.

Failure under $38.00 suggests that price could continue toward the Rectangle Pattern low into $36.00 per share (essentially testing the 2013 low again).

One other factor to watch is volume – note how volume has increased steadily in 2013 as compared to 2013.  Despite an early-2013 increase along with the red distribution volume of mid-2013, volume has actually been trailing off (decreasing) from the mid-2013 peak.

If you are trading or investing with this fund, continue to focus your attention on this broader price pattern. the $35/$36 critical price inflection level, and the current trendline interplay into $38.00 per share.

Also, be sure to check out a free affiliate offer from EWI which discusses the current state of global markets (50-pages):

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Corey Rosenbloom, CMT
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