Chart Analysis » EEM

EEM Chart – Stuck in Trading Channel

Alex F — Thu, 25 Feb 2010 21:57:35 +0000

I charted EEM near the end of the trading day on February 25, 2010 when it was trading at $38.59. I have a vested interest in this because I’m short two March 41 naked puts. From what I see on the chart I have a fighting chance to see my position end profitably since I took in $1.60 for each option.

The way the chart is moving it looks like the trading channel holding recently gives EEM a range from $38 (ish) to 40. Along with this trading channel, the three potential technical indicators that are going to be most interesting to watch are the 20 and 200 day moving averages and the trend line of lower highs from the beginning of the year. EEM hit resistance at the 20 day moving average today and stopped its intraday rally from its lows. If EEM can get above its 20 day moving average, which might be a tall order after dipping below it the past couple of days, it will have to fight to get above this trend line of lower highs.

On the other hand the 200 day moving average offered support today around the same area as the bottom of this trading channel I’ve identified. I hold the 200 day moving average in high regard when I see support hold. Once the 200 day moving average is in play the downside risk typically starts diminishing. All of that together makes EEM a good chart to watch as one of these indicators is going to break soon and should show us the likely direction for the following few weeks or 10%, whichever comes first. I’m expecting the move to be higher and probably won’t exit my position even on a dip below the $38 range.

EEM Chart – Back to the Top of Trading Channel

Alex F — Wed, 06 Jan 2010 16:06:15 +0000

I charted EEM this morning when it was trading at $43.09. I’m keeping my analysis simple on this one today. EEM has been trading in a channel for a few months and it’s back to the trend line of higher highs. While it could break above that line and continue higher, I expect EEM to move lower again. A drop of a dollar would bring it close to its 10 day moving average which could offer support, but hasn’t been a completely accurate indicator of support for EEM in the past. I’ll be more interested in calling EEM a buy when it gets back to the trend line of higher lows. That line has worked as an entry point for nearly six months.

EEM Chart – Near Support

Alex F — Sat, 03 Oct 2009 00:55:43 +0000

I charted the large emerging markets ETF, EEM, late in the day on October 2, 2009 when it was trading at $37.81. You can see the two lines I drew marking EEM’s trend lines of higher highs and higher lows. This trading channel is narrowing and I expect the lower line to offer support again. Aiding in that potential support is the 50 day moving average (dma) in blue. It’s almost in line with the trend line of higher lows and has acted as support a few times this year, especially over the past two months. On the bearish front, the 20 dma broke which could act as resistance, just as it provided support through most of April, May and the beginning of June.

Disclosure: I sold naked puts on EEM earlier today at the October 38 strike. So that shows I expect it to find its footing within the next two weeks.