Wednesday’s ETF Chart To Watch: MSCI Germany Index Fund (EWG)

by on May 2, 2012 | ETFs Mentioned:

Stocks staged an impressive rally on Wall Street yesterday as optimism bolstered indexes higher following encouraging economic data releases. The latest ISM figure painted a bullish picture as manufacturing data, which is considered to be a leading indicator, came in stronger-than-expected; growth among U.S. manufacturers increased as the ISM came in at 54.8% for April, beating expectations of 53.3% as well as last month’s reading of 53.4%  [see Free Report: How To Pick The Right ETF Every Time].  

Investors will turn their attention overseas later today as German employment data comes out, helping to shed light on the health of this economic powerhouse in an otherwise fragile region. As such, our ETF to watch for today is the iShares MSCI Germany Index Fund (EWG), which may see an increase in trading volumes as investors digest the latest employment data; analysts are expecting for a loss of 10k jobs versus the previous decline of 18k [see also Euro Free Europe ETFdb Portfolio]. 

Chart Analysis

EWG appears to have endured a healthy correction over the past month or so; notice how this ETF turned south after its most recent attempt at conquering the $24 level on 4/2/2012. Since then, EWG had been plagued with choppy trading, oscillating between $22.50 and $21.50 a share a share from 4/4 until 4/26/2012. EWG appears to be regaining bullish momentum for two reasons; first and foremost, this ETF has managed to hold support above the 200-day moving average (yellow line), perhaps suggesting that buyers are willing to step in at relatively low levels in anticipation of continuing upside [see also Five Important ETF Lessons In Pictures]. 

Click To Enlarge

The second piece of bullish evidence is the fact that EWG appears to have broken out of its recent trading range; notice how EWG has kept afloat above $22.50 a share for the last three trading sessions, perhaps suggesting that bullish momentum is gradually accumulating around these levels [see also Euro Drama Is Back: Trade The Range In FXE]. 


If the latest German employment data comes in better-than-expected, optimism from the Euro zone could bolster EWG higher. In terms of upside, this ETF has major resistance at $24 a share, given that it has recently failed to hurdle over this level. On the other hand, if employment data paints a pessimistic picture, concerns over the economic health of the Euro zone are likely to resurface. In terms of downside, EWG has major support at $21.50 a share, while a break below that level would call for re-assessment of the ongoing uptrend [see also Five Questions To Ask When Buying An ETF]. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit taking techniques.

Follow me on Twitter @SBojinov

[For more ETF analysis, make sure to sign up for our free ETF newsletter or try a free seven day trial to ETFdb Pro]

Disclosure: No positions at time of writing.