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].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].
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.
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Disclosure: No positions at time of writing.
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