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

by on March 12, 2013 | ETFs Mentioned:

Much to the bears’ frustration, U.S. equity markets opened in red territory to kick off the week only to regain their footing and stage a rally as the trading session progressed, posting yet another green day on top of the hefty gains accumulated year-to-date. Stocks initially sold off as investors fretted over data from China, which showed less-than-expected new loans for the month of February; nonetheless, bullish sentiment prevailed as euphoria from last Friday’s robust jobs data kept confidence levels afloat [see also Free Report: How  To Pick The Right ETF Every Time].

PD-Wall-StreetWith no major economic data releases on tap for today at home, investors will turn their attention to the latest German CPI report, which is expected to come out before Wall Street’s opening bell. As such, our spotlight will  turn to the iShares MSCI Germany Index Fund (EWG, B+), which could experience volatile trading as investors react to the latest inflation report. Analysts are expecting German CPI to come in unchanged at 1.5% year-over-year [see How To Take Profits And Cut Losses When Trading ETFs].

Chart Analysis

EWG has endured a correction since peaking at $26.19 a share on February 1, 2013, and it appears to be resuming its longer-term uptrend judging by its bullish price action over the last week. This fund has been in an uptrend since bottoming out in late July 2012 as made apparent by the stock’s ability to post higher-highs while moving along rising support (blue line). Despite its recent pullback, this ETF is staying on track and should continue to trade higher over the coming weeks assuming its current technical pattern remains intact [see ETF Technical Trading FAQ].

Click to Enlarge

However, one piece of bearish evidence is worth noting; notice how this ETF has failed to settle above $25.50 a share (red line) on several occasions throughout February of 2013, perhaps hinting at a potential trend reversal [see How To Swing Trade ETFs].


If the latest CPI report paints a gloomy outlook for the European powerhouse, EWG may face headwinds on the day; in terms of downside, this ETF has immediate support around $24 a share. On the other hand, if markets react with optimism to the latest inflation data, EWG may continue its rebound; in terms of upside, this ETF has immediate resistance around $25.50 a share. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques.

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Disclosure: No positions at time of writing.