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

by on January 9, 2013 | ETFs Mentioned:

With no major economic releases taking place on the homefront this week, equity markets will likely continue to trade sideways until a fundamental development arises and sways sentiment. Corporate earnings season is upon us once again and aluminum juggernaut Alcoa has kicked off the ceremonies with a profit. Quarterly performance results will come under the spotlight over the coming days as investors look for signs of improving growth rates and optimistic outlooks from various industry leaders [Download How To Pick The Right ETF Every Time].

Investors will once again have to look overseas for economic data this week. Our ETF to watch for today is the iShares MSCI Germany Index Fund (EWG, A), which could experience volatile trading as investors digest the latest German industrial production data; analysts are expecting this figure to come in at -2.9%, marking a modest improvement over last month’s reading of -3.7% [see Free ETF Country Exposure Tool]. 

Chart Analysis

EWG kicked off the first trading day of 2013 on a bullish note only to give in to profit-taking pressures the following days. Despite recent weakness, this ETF is holding on to major gains since bottoming out and rebounding off its 200-day moving average (yellow line) on November 16, 2012; since then, EWG has posted higher-highs along a rising level of support, further showcasing the strength of its longer-term uptrend (blue line) which began in late July of 2012 [see The 5 Most Important Chart Patterns For ETF Traders].

Click to Enlarge

What’s also noteworthy is that EWG has managed to settle above its previous resistance level (red line) around $24 a share; EWG now has immediate support near the $24 level should selling pressures persist [Download 101 ETF Lessons Every Financial Advisor Should Learn]. 

Outlook

If the latest German production data paints a better-than-expected outlook for the European powerhouse, EWG could have the wind at its back; in terms of upside, the next major resistance level for this ETF comes in at around $26 a share. On the other hand, disappointing economic data may invite further selling pressures; in terms of downside, this ETF has immediate support at $24 a share followed by the $22 level. 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.