Each of the ETFs discussed below have been in long-term trends, either up or down, and are now close to, or have already started to show signs of trend reversal. . . .Coal ETF (KOL), 20+ Year Treasury Bonds (TLT), Treasury Bonds reverse ETF (TBT), Euro Trust ETF (FXE).
January 18, 2013 No Comments
The SPDR Gold Trust (GLD) continues to show signs that it wants to go higher. Is it close to an upside move now, or might further declines come first?
There are similarities in the charts of GLD when compared to SLV (see recent SLV post). What you will notice is that the behavior of GLD is reflecting a bit more strength when compared to SLV. The long-term trend characteristics of GLD have held up better over the past year-and-a-half correction phases.
GLD moved into a corrective phase after hitting a record high of $185.85 in September 2011. It eventually found support at $148.27 in December 2011, completing a 20.2% decline. Contrast that drop to SLV, which fell 48.6% after hitting its record high of $42.78 a month earlier.
GLD subsequently tested that support area in May 2012, creating a second bottom at $148.53. Around that time it hugged support of its weekly 100 period exponential moving average (ema) for approximately 10 weeks before rallying. SLV fell all the way to its 200ema on the weekly chart before finding support during its correction.
The significance of the $148.27/.53 support area for GLD is strengthened by the inclusion of two Fibonacci retracement levels measured from the more recent prior up trends, as well as the 10-week test. Keep a close eye on the weekly 100ema in the future as it is also an important indicator for long-term support. Eventually GLD rallied off that support zone to well above its long-term downtrend line, a bullish indication.
Since hitting resistance at $174.07 in early-October 2012, GLD has been in a correction. That correction includes an AB=CD pattern where the second leg down matches the first leg at $158.24. So far, support has been found at $158.39, the recent low, which also completes a 61.8% Fibonacci retracement ($158.29) of the prior rally. Also, a potential double bottom has formed on the daily chart. A breakout of the double bottom is indicated on a move above $164.14. In other words, there is reason to believe that GLD may have found a long-term bottom which could be followed by another strong leg up.
Alternatively, a daily close below $158.39 will likely see GLD drop to the $155 to $154 support zone, consisting of the weekly 100ema and 78.6% retracement, respectively.
There are two potential target zones identified on the above daily chart. The first is from approximately $177.81 to $178.46, the 78.6% retracement of the long-term downtrend, and the 78.6% projection of the first leg up off the $148.53 bottom, respectively. Higher up is potential resistance from approximately $183.93, the 78.6% projection of the first leg up off the May 2012 bottom, and $185.85, the record high from September 2011. (www.etf-portfolios.com)
January 14, 2013 2 Comments
Back in June 2012 iShares Silver Trust (SLV) ETF found long-term support at $25.34, completing a 61.8% Fibonacci retracement of the internal uptrend, and stopping at the important 200 weekly exponential moving average (ema). That was a 47.6% correction off the $48.35 high reached in April 2011. A rally followed with the ETF rising above its long-term downtrend line. Resistance was subsequently found at $34.08 in October 2012, leading to a correction down to the recent low at $28.61.
SLV may now be close to continuing the uptrend begun off that June 2012 low. The downside correction off the $34.08 high completed a 61.8% Fibonacci retracement ($28.68) of the prior rally, and formed a bullish AB=CD pattern. For the past four weeks SLV has been testing support in the $28.61 price area and support has held. In addition, support of the long-term downtrend line has also been tested.
Further weakening, down to the 78.6% retracement at $27.21, is likely if SLV sees a daily close below $28.61. Otherwise, signs of strengthening should lead to a second leg up in the uptrend off the weekly 200ema. After reaching an oversold level upward momentum is improving as seen in the daily RSI.
There are several target zones that can be watched. The first is from approximately $36.12 up to $37.46, and includes a number of Fibonacci levels, as well as the important peak from February 2012 at $36.44. The price structure of the long-term downtrend would be broken on a daily close above that peak giving further strength to a bullish long-term outlook. At $37.35 the second leg up would match the move in the first leg.
The second target zone to watch is from $39.85 to $39.75. If reached SLV would have completed a 61.8% retracement ($39.56) of the full downtrend. Above there is another resistance zone around $42.73 to $43.43, consisting of the 161.8% projection of the first leg up and the 78.6% retracement level, respectively. www.etf-portfolios.com
January 13, 2013 1 Comment
The Market Vectors Biotech ETF (BBH) broke down from a double top and internal bearish ascending wedge (seen on the daily chart below) several weeks ago after completing a 3.618 per cent price extension of the 2005-2008 decline.
Medium-term bearish indications include the following:
-Overbought RSI turning down on weekly chart
-Ended last week clearly below the 55 daily exponential moving average (ema) for first time since at least November 2011, on higher volume (above prior three weeks)
- The daily 55ema has started to turn over
-Breakout of bearish ascending wedge (although it is internal to the larger parallel ascending channel).
-Last week was the fourth consecutive week of declines (potential positive short-term, but bearish overall for the 14-month uptrend
Even though BBH closed at $50.89, the low for the week (actual low 50.84), it’s in an area of confluence where several indicators point to potential support, which could lead to a bounce. The lower parallel trend line, the 21ema on the weekly chart (50.76), and the 38.2% Fibonacci retracement (50.74) of the rally from the early-March low, all converge near last week’s low.
It’s possible that the upward channel continues to progress higher in its current structure, in which case a rally from around the current support area would lead to a continuation of the uptrend into new highs. Given the above medium-term bearish analysis, this scenario is starting to look less likely. A more likely scenario, if the support in mentioned in the previous paragraph holds, looks to be a bounce into resistance and subsequent weakening with the BBH continuing to fall to the next significant support zone.
Alternatively, BBH continues to fall this week into the next support zone.
There looks to be significant support around the lower long-term trend line in a zone from approximately $47.48 to $46.22. A combination of four Fibonacci levels makes up that zone, along with the trend line and daily 200ema. (www.etf-portfolios.com)
November 4, 2012 No Comments
Five weeks ago the PowerShares DB US Dollar Index Bullish Fund (UUP) ETF broke down out of a long-term bearish wedge price formation. The pivot occurred on a decline below the lower uptrend line of the wedge, which happened to coincide with a break below the 50 period simple moving average (sma) on the weekly chart. That move followed a decline from resistance of the weekly 200sma six-weeks prior – the top of the wedge.
The decline that followed to $21.57, reached four-weeks ago, took UUP to below a long-term support level, which is indicated by the blue horizontal line and arrows on the weekly chart above, and completed a 61.8% Fibonacci retracement of the uptrend off the May 2011 low of $20.84.
UUP remains in a long-term downtrend, and the recent high, top of the wedge, could not even get close to the multi-year downtrend line. That high was a bit shy of completing a 50% retracement of the prior downtrend, found resistance at the 200sma, and reflects underlying bearishness within UUP. In other words another lower swing high has completed and reflects acceleration in the trend given the steeper angle as seen by the internal downtrend line in the weekly chart below.
The above analysis of the long-term patterns points to further declines in UPP over time. As we move into a shorter time frame next, by looking at the daily chart, additional bearish signs are seen.
First, note that the top of the wedge completed with a head & shoulders reversal pattern. When UUP broke below the neckline selling accelerated. Subsequent to UUP finding support at $21.57 four-weeks ago short-term profit taking rallied the ETF up to long-term resistance ($21.94), previously support, as represented by the horizontal blue line on the chart. The ETF attempted to break above that resistance area on four separate days and failed.
A bearish flag pattern formed over the past several weeks with a bearish trigger occurring last Thursday. On Wednesday of last week the 50sma crossed below the 200sma on the daily chart, another bearish confirmation.
The bearish flag is negated for now if UUP can close above $21.94 in the near-term and then gains further strength. A rally up towards resistance of the lower trend line of the wedge and breakout pivot around $22.23 is then possible. However, given all the bearish indications discussed above a decline to lower support levels looks likely.
The target from the bearish wedge price formation is the beginning of the pattern, which is around $20.87, just shy of the long-term low of $20.84. When calculating a target based on the short-term pattern of the flag there’s almost an exact match. The price objective based from the flag pattern is approximately $20.81 [22.54 – 21.57 = 0.97, 21.78 (flag pivot) – 0.97 = 20.81]. (www.etf-portfolios.com)
October 7, 2012 No Comments
iShares MSCI Mexico Index Fund (EWW) may have completed a rally last week that could lead to further downside. The underlying pattern structure of EWW over the past six-months has many similarities to the S&P500 Index. EWW broke down from a bearish Head & Shoulders (H&S) top in early-May before finding support at $53.49 and bouncing.
An Inverse H&S reversal pattern was then formed with EWW breaking to the upside less than two-weeks ago. Although the neckline resistance, around $60.20 has not yet been reached, last week’s high at $58.99 reached the measuring objective from the Inverse H&S, matched previous support off the head of the H&S Top, and was just shy of the 61.8% retracement of the downtrend off the right shoulder.
Further strength back up towards $59.00, or even $60.20 could present a new shorting opportunity. (www.etf-portfolios.com)
June 25, 2012 No Comments
Since mid-2008 the United States Natural Gas Fund ETF (UNG) has been trending down. There are now the beginning signs that it may have reached a bottom.
Recently UNG found support at the $5.00 price area having hit a low of $4.98 on January 19, 2012. A second decline found support a little higher at $5.02. Together, we now have the makings of a double bottom reversal pattern.
Supporting evidence includes:
- Downtrend has accelerated lower at three angles of descent, before hitting the recent bottom, thereby creating a fan effect
- Significantly higher volume recently, which can best be seen on the weekly chart
- Volume spikes further into a trend can signal exhaustion
- Bullish divergence with weekly RSI
Resistance of the current short-term trend is defined by the trend line and 21 exponential moving average (ema) (now at $5.56) as seen on the daily chart. The next higher trend line and 55ema mark resistance of the medium-term trend.
A breakout of the double bottom price pattern occurs above $5.98, which gives a minimum target of $6.98. At that point UNG would be above the 55ema and at or close to resistance of the long-term trend line starting from the 2008 high of $127.78. (www.etf-portfolios.com)
February 11, 2012 No Comments
As posted a couple months ago iShares MSCI Japan Index Fund ETF (EWJ) had broken down from a large head and shoulders top reversal formation, as seen in the weekly chart.
Since, it has failed to follow-through to the downside and is now showing signs of strengthening, at least in the short-term. A double bottom reversal has formed on the daily chart. Bullish confirmation is needed and signaled on a close above the neckline at $9.44. Last week’s close was $9.45. If EWJ can rise higher from here or stay above the $9.44 price area, then further upside is likely. Around $10.00 is the next area to watch for resistance.
The long-term weekly bearish head and shoulders top remains valid however unless EWJ closes above the downtrend line. This line is coming down from the top of the head and connecting the right shoulder. (www.etf-portfolios.com)
January 21, 2012 No Comments
iShares MSCI Brazil Index Fund ETF (EWZ) broke out of a well formed head and shoulders bottom reversal pattern last week along with a pickup in volume. It has now closed above the 200 daily exponential moving average (ema) for the first time since July 2011. Also supporting the bullish breakout, the 21ema has crossed back above the 55ema for the first time since May 2011.
Last week the 50% Fibonacci retracement of the larger downtrend from April 2011 high was hit. A pullback towards the neckline support can be watched for a new entry.
The measuring objective for this reversal pattern is approximately $77.77. If the target is reached EWZ would be very close to the highs hit in the period from late-2010 to early-2011. The high during that period was $81.76.
Lower targets can include $68.40, the 61.8% Fib. retracement level, followed by $73.60, the 78.6% Fib. level. (www.etf-portfolios.com)
January 21, 2012 No Comments
Last week the iShares MSCI Japan Index Fund ETF (EWJ) fell through the neckline of a multi-year Head & Shoulders Top Reversal pattern. The breakdown was triggered at approximately $9.15, with EWJ closing at $8.84, the low for the week.
Volume did not confirm the bearish signal as it was at the low end of the range. However, given the shortened trading week, this is to be expected. Given the long-term nature of the pattern, this is a particularly bearish signal.
The measuring objective/target based on the price distance from the top of the head down to the neckline is approximately $6.67. Calculating the same based on the percentage change provides a slightly higher target of $6.94.
At some point EWJ will find higher support and retrace back towards resistance of the neckline. A new entry level can be watched at that point to take advantage of the follow-through to the downside.
The next support area may be around $8.67, the 61.8% Fibonacci retracement of the full rally off the March 2009 low. Below there is possible support around $7.87, the 78.6% Fibonacci retracement level. (www.etf-portfolios.com)
November 27, 2011 No Comments