Entering text into the input field will update the search result below

High probability trade sets up in EWH as long and short term bullish patterns converge

May 01, 2011 12:52 PM ETEWH
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

 What’s interesting about the current chart pattern in the iShares MSCI Hong Kong Index Fund ETF (EWH) is that a tight consolidation triangle pattern is forming right up against resistance of the downtrend line that identifies the parameter of a five month corrective base. This base is a long term Bullish Flag formation with the triangle part of a Bullish Pennant pattern – a pattern within a pattern. EWH Weekly Chart

A move above the downtrend line ($19.67) will signal a breakout of both the long term Bullish Flag and short term Bullish Pennant, thereby strengthening the setup. 

The Pennant allows for tighter risk management as a move below the trend line support (see orange line) at the bottom of the pattern, ($19.15) will identify failure in the short term (at a maximum). Tighter risk management can also be used. Other supportive bullish signs include: EWH Daily Chart


Long Term (weekly chart):

  -during recent five month correction support of the 50ema held

  -12ema stayed above the 21ema during correction

  -Bullish Pennant is forming just above support of the 21ema and right at support of the 12ema

  -volume has been declining during correction

  -most of the Flag occurred above the 61.8% retracement support level of the larger downtrend

  -Flag is only the second base formation after coming off the March 2009 low

Short term (daily charts):

  -horizontal support of the Pennant is identified numerous times (horizontal grey line - circles)

  -successful test of both the 50ema and 21ema during recent pullback

  -failed to stay below the 200ema



Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.