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

|Includes: iShares MSCI Hong Kong ETF (EWH)

 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