After its peak and crash in the Great Recession of 2008, the German ETF (which resembles the DAX index) formed a large symmetrical triangle – it finally broke out in early 2013. The trend line from that breakout, as shown on the longer termed chart, continues to hold.
As you will note on the daily chart, EWG is trading in a range between about $29 -$32. A breakout through either side would imply a bullish or bearish prognosis. The daily chart shows a positive rebound off of both the short momentum indicators (stochastics, RSI) and the longer termed MACD. The index is above its vital 200 day MA. Moneyflow is the only worry here, where you can see both the Chalkin MFI (top indicator) is in bearish territory, and the Accumulation/Distribution (bottom indicator) has broken a trend. Relative strength vs. the S&P500 broke its 20 day MA back in February, but it is attempting to rally.
The big picture is bullish enough to consider buying EWG if it manages to break its neartermed resistance at $32. I’d want confirmation of positive moneyflow via the indicators noted on the daily chart at that time before committing. But the trend has been holding its own – especially since 2012. This could continue to be a good long termed hold for consideration, should the neartermed picture break to the upside.
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Readers who are involved with investment clubs or other business groups with more than 20 members may contact Cindy McIntyre ([email protected]) if you would like Keith to speak at one of your functions on investment planning and/or technical analysis.
