Tuesday’s ETF Chart To Watch: MSCI Japan Index Fund (EWJ)

ETF Database

Wall Street kicked off the week on a sour note as investors were quick to change gears into profit-taking mode following last week’s broad-based rally. With the ECB pushing forth its bond-buying program, the pressure is now on the Fed to act; given last Friday’s worse-than-expected U.S. employment report, investors are now more hopeful than ever that Chairman Bernanke will announce some sort of stimulus measures in this week’s FOMC press conference [see also Peter Schiff: The Only Way To Fix The Economy Is To Let It Fail].

With no major releases on the homefront today, our spotlight shifts onto the iShares MSCI Japan Index Fund (EWJ, B+). This

View gallery


Wall Street

ETF may see an increase in trading activity at the opening bell following the overnight reaction to the latest Machine Tools Orders data; analysts are expecting Japan’s machine tool orders figure to come in unchanged at -6.7%, marking another contraction in the nation’s manufacturing sector [see also Ex-Japan ETFs In Focus].

Chart Analysis

EWJ has been oscillating between the $8.6 and $9.4 levels since slipping below its 200-day moving average (yellow line) at the start of May 2012. Since then, shares have bounced off a slowly rising support line (bottom blue line), although they have failed to summit resistance around $9.4 a share (upper blue line); notice how EWJ attempted, and failed, to hurdle over its 200-day moving average on July 3 and later again on August 21, 2012. This ETF is currently in an attractive spot trading near the bottom-half of its range, which offers attractive upside to shorter-term traders as well as the opportunity to more carefully manage downside risk [see also 5 Tips ETF Traders Must Know].

View gallery



Click To Enlarge

Although its support level has been steadily rising, conservative investors should hold off from jumping in long until EWJ has established definitive support above its 200-day moving average [see also 25 Things Every Financial Advisor Should Know About ETFs].


Worse-than-expected machine orders data could create headwinds for Japanese equity markets; in terms of downside, EWJ  has immediate support at $9 a share followed by the $8.8 level. On the other hand, encouraging manufacturing data could help breathe some confidence into EWJ; in terms of upside, this ETF could face resistance at $9.2 a share followed by the $9.4 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.

Click here to read the original article on ETFdb.com.

Related Posts:

View Comments (0)