Greek lawmakers approved a package of economic changes and austerity measures earlier this month, allowing them to begin accessing a chunk of the country’s nearly $98 billion international bailout program. Under the terms of the bailout, Greece must pass certain laws and measures that, ironically, were supposed to have been passed years ago. Will this be a catalyst to some upside for their homeland equity markets? Let’s see what the charts have to say about this potential.
Technically, there is some potential that the Greek ETF (representing FTSE Greek 20) is in the process of breaking a downtrend. This bearish trend has been in place for almost 2 years. Its no surprise that the ETF is finding support at around the 2012 lows. Some supporting technical evidence that suggest potential upside on this ETF include:
- Divergence on MACD since early 2015 – a significant mid termed bullish signal
- Rising momentum via RSI, Stochastics – short termed siganals
- Dramatic increase in money flow – another significant mid termed bullish signal.
- The recent break of the downtrend line at around $10/sh -yet another significant bullish signal
Some things that need to happen before GREK becomes a safer buy include:
- A break above the (red line) 200 day MA that lasts for a week or (preferably) longer
- A move above $12.50+ (last significant peak) if you are wanting the lowest risk trade
- Volume to increase by 50% +/- from current levels on a rally through either of the above two levels
I would not view Greece or this ETF as a long termed play. The country has a long history of anti-austerity, anti-capitalism and an attitude of pro-socialism and entitlement (something that our own country, while still a long way off from Greece’s socialistic attitudes – needs to guard against). As such, and as with everything on the market with this ETF’s kind of historical volatility, I view any potential opportunity in the Greek market as a temporary trading opportunity.