{"id":130167,"date":"2018-07-16T08:42:35","date_gmt":"2018-07-16T12:42:35","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=130167"},"modified":"2018-07-16T02:46:06","modified_gmt":"2018-07-16T06:46:06","slug":"emerging-markets-could-be-starting-a-relief-rally","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2018\/07\/emerging-markets-could-be-starting-a-relief-rally\/","title":{"rendered":"Emerging Markets could be starting a relief rally"},"content":{"rendered":"
July 16, 2018<\/div>
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By TheTechnicalTraders.com<\/u><\/a><\/strong><\/p>\n

Over the past 4+ months, many emerging markets have come under pressure as the global markets were roiled by the sudden and relatively deep market retracement in early February.\u00a0 For many, this downward price trend has been frightening and somewhat disastrous.\u00a0 Recently, though, something new appears to be on the horizon that may be the early signs of renewed life for many Latin American, South American and Indian markets \u2013 early signs of support and a potential bottom formation in the works.<\/p>\n

Our researchers have been following the recent moves in these emerging market ETF for Brazil, Latin America, and India with great interest because we believe in finding opportunities when many others may not be looking for them.\u00a0 We believe these early warning stages of a market bottom could be an excellent time to \u201cforward think\u201d any possible price recovery that may occur in the near future and to prepare for any success opportunities that may arise.\u00a0 Heck, we are traders and if the opportunity exists for a decent profit with little risk, we\u2019ll investigate it.<\/p>\n

Let\u2019s get started with this Daily chart of the BRZU (Brazil Bull 3x ETF).\u00a0 We can see from this chart the extended downtrend channel that has existed for nearly 4 months.\u00a0 Near the bottom right side, pay close attention to the horizontal price channel that is setting up \u2013 this could be an excellent bottom rotation channel resulting in an upside breakout eventually.\u00a0 With only 3 to 7 days to go before the upper price channel may be challenged and a clear double bottom formation near $16, any downside rotation below $17.50~18 would be an excellent buying opportunity range with $16 being our protective stop level.\u00a0 Assuming this channel continues as price reaches this apex, at some point price will either rotate higher or continue to channel lower (below the $16 level).\u00a0 So, buying near the lower range of this horizontal price channel may be a great opportunity for an upside move.<\/p>\n

Additionally, the GAP between $26 and $28 is a clear upside target.\u00a0 We would hope this move would be quick and simple, buy below $18 with a target above $26.\u00a0 A quick $9 profit per share (50%+) and we could manage the remainder of our trade by moving our stop to $23 or $24 to protect against any unwanted losses.<\/p>\n

Yet, in order for this trade to really have any teeth, we would need to see some correlation across multiple emerging market ETF.\u00a0 Then we could really say that we may be seeing some type of bottom rotation starting to form.\u00a0 Let\u2019s look for more correlative signals.<\/p>

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This next chart is a Daily INDL (India Bull 3x ETF) and it is showing a similar pattern that has recently broken above the downward sloping price channel.\u00a0 This is a good sign that price may be attempting a rotational upside move in the near future.\u00a0 Yet, upon closer inspection, we can see that a double top is setting up $80 that may unsettle this move.\u00a0 Additionally, the range of the price channel is rather deep \u2013 $68 to $80.\u00a0 That $12 range may include a bit more RISK than we want to consider at the moment.\u00a0 Certainly, this trade looks like it may have some potential, but there are still concerns that this trend may be a false flag type of move.<\/p>\n

We would like to see more pronounced and defined \u201chigher low\u201d rotations in the process of creating this double top formation.\u00a0 Currently, we have a few moderate higher low setups, but the deeper low near the end of June is concerning.\u00a0 Ideally, we would wait for a low price move below $72~74 and watch for price rotation back to the upside as a better sign that price is \u201ctechnically conforming to Fibonacci price rotation theory\u201d.<\/p>\n

Still, this pattern is setting up as resistance near $80 with a clear sign that a bottom could be forming in INDL at the moment.\u00a0 Our opinion is to watch it and wait for a better setup before taking a position.\u00a0 We believe we can identify a better entry point by waiting for price to show us it is ready to move higher instead of presuming this rotation WILL move higher.<\/p>\n

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Lastly, let\u2019s take a look at this LBJ (Latin America Bull 3x ETF) Daily chart.\u00a0 We find this chart very interesting for one simple reason \u2013 the big \u201cU\u201d shaped bottom formation near $17.50 and the clear upside price swing that is taking place right now.\u00a0 You can clearly see the RED price channel slopes that are key to understanding price resistance and the more aggressive downward slope that was breached in mid-June.\u00a0 Yes, should this ETF rally back to near $30 from this level, we would be looking at a 50%+ increase in value.\u00a0 Yet, again, we have to learn to be patient and wait for the price to show us that it is preparing for an upward swing higher.<\/p>\n

As of right now, we have \u201chigher highs\u201d, which is a great sign that the trend has changed to the upside.\u00a0 Yet, we also have a clear GAP between $23.50 and $25.50 that could become immediate resistance.\u00a0 We also don\u2019t have any \u201clow price rotation points\u201d that we can use as a technical confirmation of price trend and price rotation.\u00a0 In other words, we have what may be an impulse move higher with no real confirmation of longer-term upside potential.<\/p>\n

We would caution investors from jumping into this trade at this time and urge them to wait for better confirmation \u2013 likely after the breach of the price GAP is filled and price rotates back below, or near to, $20.\u00a0 Short and simple, this is a very interesting bottom formation in the works that has not qualified as a solid uptrend yet.\u00a0 There are still too many unanswered concerns to allocate capital towards this trade.<\/p>\n

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While all of this is interesting and possibly a bit early in terms of bottom formation expectations, we believe the correlation across these multiple markets shows enough evidence of a potential emerging market bottom in select markets as it relates to these under performing Latin American and Indian markets.\u00a0 Obviously, we still have to be cautious of any downside rotation that could be dangerous \u2013 these percent ranges still show quite a bit of risk.\u00a0 But the upside potential for a perfectly timed entry may be just around the corner.<\/p>\n

Want to learn more about what we do and how we help traders find success in the markets?\u00a0 Visit\u00a0www.TheTechnicalTraders.com<\/u><\/a>\u00a0to learn how our research team, with more than 50 combined years of trading experience, can assist you in finding tremendous trading opportunities each month as well as provide you with detailed market research, Daily market videos and much more.\u00a0 Our job is to help you find and execute successful trades in the future and to help you stay aware of future market moves.<\/p>\n

Visit\u00a0www.TheTechnicalTraders.com\/FreeMarketResearch<\/u><\/a>\u00a0to see how our research team has been ahead of these turns in the global markets for the past 8+ months.\u00a0 We have an incredibly deep research library of posts available to all members\/visitors at the link above.\u00a0 We are certain you will find value in our work and our abilities to accurately predict the markets.\u00a0 We\u2019ve been calling for upside price moves in the US Equities markets since the middle of February when everyone was warning about a collapse.\u00a0 We called the downtrend in China months before it happened and we recently called the downward rotation in Crude 4 days before it happened.<\/p>\n

By TheTechnicalTraders.com<\/u><\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

By TheTechnicalTraders.com Over the past 4+ months, many emerging markets have come under pressure as the global markets were roiled by the sudden and relatively deep market retracement in early February.\u00a0 For many, this downward price trend has been frightening and somewhat disastrous.\u00a0 Recently, though, something new appears to be on the horizon that may […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-130167","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/130167","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=130167"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/130167\/revisions"}],"predecessor-version":[{"id":130168,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/130167\/revisions\/130168"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=130167"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=130167"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=130167"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}