Friday’s ETF Chart To Watch: MSCI Canada Index Fund (EWC)

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Bullish pressures persisted for yet another day on Wall Street as investors took advantage of the low trading volume environment despite the lackluster string of economic data release. Major equity indexes settled into green territory although weekly jobless claims and housing starts data both missed the mark, showcasing the sheer optimism that continues to drive stocks higher. Investors at home will look to end the week on another positive note as the latest consumer sentiment data comes out after the opening bell [see also 3 Commodities To Bet With Buffett].

Investors will also have to turn their attention to the north later today as Canadian CPI hits the street. As such, the iShares MSCI Canada Index Fund (EWC, B) could see an increase in trading volumes following the latest inflation report; analysts are expecting for Canada’s consumer price index to come in unchanged at 2% [see also 17 ETF For Day Traders].

Chart Analysis

After oscillating between the $24.50 and $29 levels since October of last year, EWC finally appears to be regaining bullish momentum; notice how this ETF has steadily climbed higher after its most recent bottom (blue line) in early June of this year. Although EWC is still below $29 a share, the fund recently broke above its 200-day moving average (yellow line), which suggests that bullish momentum is back and will likely retest historical resistance levels in the upper-half of its trading range (red line) over the coming weeks [see ETF Technical Trading FAQ].

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EWC

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Despite the attractive upside, conservative investors should wait until EWC establishes definitive support above its 200-day moving average for five or more consecutive trading sessions before jumping in long [see also Easy-As-ABC ETFdb Portfolio].

Outlook

If CPI comes in above expectations, inflationary concerns could create headwinds for Canadian markets; in terms of downside, the first support level for this ETF comes in at $27 a share followed by $25 a share. On the other hand, a bullish reaction to the latest inflation report could propel EWC higher along its rising support line; in terms of upside, this ETF has resistance at $28 a share followed by the $29 level. 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.

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