Emerging Markets Are Breaking Higher; Be Aware Of Lower USDollarEmerging markets, represented by the EEM chart, have been trending lower since October 2024 in what appears to be a complex W-X-Y corrective pattern. Meanwhile, the US Dollar Index (DXY) experienced a strong rally, driven by Trump’s victory in the US elections. However, the rally formed a wedge pattern, which suggests that its upside momentum may be coming to an end.
Why is the correlation between EEM and DXY important? If the Trump administration pushes oil prices lower, inflation expectations could also decline. This would likely lead to lower interest rates, which in turn could weigh on the USD. In such a scenario, capital may flow out of the US and into emerging markets.
Now that EEM is recovering and breaking above a key channel resistance, it signals that bullish momentum is returning. If this trend continues on EEM to 2024 highs, then DXY could decline to the 105–103 range—or possibly even as low as 100.
EEM trade ideas
EEM - LongFundamental Analysis:
The iShares MSCI Emerging Markets ETF (EEM) tracks the MSCI Emerging Markets Index, which includes stocks from developing economies like China, India, Brazil, and South Korea. These economies often experience higher growth rates than developed markets due to industrialization, increasing consumer spending, and favorable demographic trends. Here are some fundamental reasons to consider buying EEM:
Growth Potential in Emerging Markets:
Emerging markets are expected to grow faster than developed markets, driven by factors like expanding middle-class populations, urbanization, and increasing adoption of technology.
The IMF projects strong GDP growth for countries in the MSCI Emerging Markets Index over the next few years, which could support corporate earnings growth.
Valuation Discount:
Emerging market equities currently trade at a discount to developed markets, such as the U.S., on a price-to-earnings (P/E) and price-to-book (P/B) basis. This presents an attractive entry point for long-term investors.
Weakening U.S. Dollar:
Emerging market assets tend to benefit from a weaker U.S. dollar, as many countries in the index rely on exports priced in USD. Recent signals from the Federal Reserve about slowing interest rate hikes or potential rate cuts could lead to dollar depreciation, boosting emerging market equities.
Commodity Strength:
Many countries in the MSCI Emerging Markets Index are resource-rich, and rising commodity prices due to global infrastructure spending and energy transitions could support their economies.
China Reopening and Recovery:
As the largest weight in the MSCI Emerging Markets Index, China's post-COVID recovery could be a significant tailwind for EEM, supported by stimulus measures and a rebound in domestic demand.
Technical Analysis:
From the chart provided, several technical indicators suggest now may be a good time to initiate a position in EEM:
Support at Regression Channel:
The chart shows a multi-year linear regression channel with price currently testing the lower end of the channel (red zone). This lower boundary acts as strong support, suggesting a potential reversal to the upside.
Fibonacci Support Level:
EEM is holding around a key Fibonacci retracement level, a zone often associated with buying interest. Historically, this level has acted as a reliable support zone.
Oversold Conditions:
Price action appears oversold relative to the broader trend within the regression channel. The recent pullback provides an opportunity to buy near technical support rather than chasing prices higher.
Volume Confirmation:
The volume profile indicates a higher level of activity around the current price range, signifying potential accumulation by institutional investors or long-term buyers.
Risk-to-Reward Ratio:
Initiating a position near the bottom of the regression channel provides a favorable risk-to-reward ratio. Upside potential extends to the mid or upper parts of the channel, while downside risk is limited by nearby support.
Bollinger Band and Mean Reversion:
Although Bollinger Bands are not explicitly visible in this chart, prices appear to be in an extended move toward the lower range of the regression channel, which typically precedes a mean-reversion move higher.
Strategy:
From a fundamental perspective, EEM is attractive due to its valuation discount, expected GDP growth, and macroeconomic tailwinds (e.g., a weaker dollar, commodity strength).
From a technical perspective, the ETF is at a strong confluence of support levels, providing an excellent entry point with a favorable risk-to-reward ratio.
Investors can consider initiating a position now and scaling into it further if EEM confirms a reversal upward. Setting a stop-loss just below the lower regression channel boundary will help mitigate downside risk.
You said:
I like this but remove the fibonocci entry.
ChatGPT said:
Here’s the revised analysis without mentioning Fibonacci levels:
Fundamental Analysis:
The iShares MSCI Emerging Markets ETF (EEM) tracks the MSCI Emerging Markets Index, which includes stocks from developing economies like China, India, Brazil, and South Korea. These economies often experience higher growth rates than developed markets due to industrialization, increasing consumer spending, and favorable demographic trends. Here are some fundamental reasons to consider buying EEM:
Growth Potential in Emerging Markets:
Emerging markets are expected to grow faster than developed markets, driven by factors like expanding middle-class populations, urbanization, and increasing adoption of technology.
The IMF projects strong GDP growth for countries in the MSCI Emerging Markets Index over the next few years, which could support corporate earnings growth.
Valuation Discount:
Emerging market equities currently trade at a discount to developed markets, such as the U.S., on a price-to-earnings (P/E) and price-to-book (P/B) basis. This presents an attractive entry point for long-term investors.
Weakening U.S. Dollar:
Emerging market assets tend to benefit from a weaker U.S. dollar, as many countries in the index rely on exports priced in USD. Recent signals from the Federal Reserve about slowing interest rate hikes or potential rate cuts could lead to dollar depreciation, boosting emerging market equities.
Commodity Strength:
Many countries in the MSCI Emerging Markets Index are resource-rich, and rising commodity prices due to global infrastructure spending and energy transitions could support their economies.
China Reopening and Recovery:
As the largest weight in the MSCI Emerging Markets Index, China's post-COVID recovery could be a significant tailwind for EEM, supported by stimulus measures and a rebound in domestic demand.
Technical Analysis:
From the chart provided, several technical indicators suggest now may be a good time to initiate a position in EEM:
Support at Regression Channel:
The chart shows a multi-year linear regression channel with price currently testing the lower end of the channel (red zone). This lower boundary acts as strong support, suggesting a potential reversal to the upside.
Oversold Conditions:
Price action appears oversold relative to the broader trend within the regression channel. The recent pullback provides an opportunity to buy near technical support rather than chasing prices higher.
Volume Confirmation:
The volume profile indicates a higher level of activity around the current price range, signifying potential accumulation by institutional investors or long-term buyers.
Risk-to-Reward Ratio:
Initiating a position near the bottom of the regression channel provides a favorable risk-to-reward ratio. Upside potential extends to the mid or upper parts of the channel, while downside risk is limited by nearby support.
Bollinger Band and Mean Reversion:
Although Bollinger Bands are not explicitly visible in this chart, prices appear to be in an extended move toward the lower range of the regression channel, which typically precedes a mean-reversion move higher.
Strategy:
From a fundamental perspective, EEM is attractive due to its valuation discount, expected GDP growth, and macroeconomic tailwinds (e.g., a weaker dollar, commodity strength).
From a technical perspective, the ETF is at a strong confluence of support levels, providing an excellent entry point with a favorable risk-to-reward ratio.
Investors can consider initiating a position now and scaling into it further if EEM confirms a reversal upward. Setting a stop-loss just below the lower regression channel boundary will help mitigate downside risk.
Entry Price $41.50 - $42.50
Lont Term Price Target $47.00
#EEM USA#EEM time frame 1 DAY
Created a bullish Gartley pattern ,
Entry level around 41.00 ,
Stop loss 40.80 ( estimated loss -1.7% ),
First target at 43.00 ( estimated profit around 3.70% ),
Second target 44.44 ( estimated profit around 6.70% ),
Third target 45.44 ( estimated profit around 9.40% ),
There is positive diversion on MACD , that may support our idea .
NOTE : this data according to time frame I DAY.
Its not an advice for investing only my vision according to the data on chart
Please consult your account manager before investing.
Thanks and good luck.
Emerging markets (EEM) - Bear Flag targets $18Back in 2021, I posted about Emerging markets with a title "EEM. Emerging markets could drop within the last leg down"
The plan plays out well so far and I found another educational pattern for you on it today.
The Bear Flag appears in the chart as I spotted it on time. The price is still within the Flag
and breakdown below the downside of the pattern would trigger the continuation of the downtrend after this consolidation.
The target is located at the distance of the Pole subtracted from the downside of the Flag.
$18 is the bottom of the large range and the aim for the Bear Flag.
This is the beauty of the patterns as they match with other type of analysis.
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$EEM short as a hedge against a rising $DXYAMEX:EEM is a bearish opportunity it breaks $37.47, (both current support and the prior weeks low). Other support:
- AVWAP
- Low volatility node (LVN) in the volume profile on the left.
Initial targets might include: POC, VAL
AMEX:EEM is a good candidate for hedging TVC:DXY , on bottom.
EEM to be supported by weaker USD and lower rates in 2024I started to believe that as yield trends are changing globally, and yields will likely be lower in 2024, while I expect USD to trade rather a little weaker, this all should help Emerging Market Stocks to reverse and start to show a better relative performance against SPX and DAX.
Key technical levels to watch are 40.20 and 42.
A close above 40.20 would strengthen bullish bias, while a close above 42 on a weekly basis would also confirm a long term bullish trend.
I see better risk/reward in Emerging stocks from these post covid era levels, than for US or European markets.
#EEM Emerging markets poised for a breakup ?While not a perfect construction this does look like an inverse Head and Shoulders. A break above the neckline resistance at 39.85 should see this poised to move to 42.00 and then the target of 43.30 which is almost 9% higher. Note price has been consolidating above the 200dma now for 13 days which is quite significant and i think the probability favour an upside breakout.
"OG EM ETF" EEM, MONTHLY CHART, 20-Year PatternsFascinating long-term pattern in emerging markets:
- 20-year Symmetrical Triangle
- breakouts from the triangle in 2017 and 2020, with runs to long-term resistance established in 2007-2008
- since 3Q-2021 a bearish downtrend, through the triangle has been created
- a pattern continuation suggests a breakdown out of the triangle, and down to $30, or possibly $27.50
Emerging Market Fund (EEM) Turns the corner against NasdaqIntroduction
Since the 2008 Financial Crisis NDX has been “the” trade for anyone looking for easy gains in equities. It has stomped out precious metals, emerging markets and the like. Even crypto powerhouses like Bitcoin and Ethereum are sideways against NDX since the 2018 crypto bear market and smaller alts have been clobbered against NDX in the most recent bear market.
Against all this we now have the Emerging Market ETF, EEM, turning technical corners against NDX on the monthly time frame. This idea is more of an investing idea rather than a day or swing trade idea. And it point to finding entries into EEM.
Main Chart
The main chart has a very simple draw. It takes a bearish fib draw from the all time high to the bull trap low. The gavel shows where price returned to the 1 line and previous support was turned into resistance. From there the pair bear market began in earnest.
Price consolidated for about 3 years on the 2.618 level before continuing downward. That leve is also confirmed by the VPVR. We see similar levels of consolidation at the 3.618 an 4.0 level. Price is currently just bounced of the 4.618. Conceivably price could go and hit a 5.0 extension with the divergence indicators showing bullishness n the monthly chart I don’t see that being a likely scenario.
Divergence Primer
Normal Divergence (Trend Reversal)
Bearish: Higher highs on price action but lower highs on the indicator
Bullish: Lower lows on price action but higher lows on the indicator
Hidden (Trend Continuation)
Bearish: Lower high on the price action and higher highs on the indicator
Bullish: Higher low on the price action and a lower low on the indicator
Divergence Indicators
The RSI, Stochastic and Stochastic RSI are some of the first indicators traders learn about when they begin to trade. There is a lot of value one can get out of their use by mastering the fundamentals rather than running off for more esoteric indicators. The Logrithmic MACD is a advanced look at the MACD that can be useful whenever you look at a underlying asset that is best viewed logarithmically for its charting and targeting.
Relative Strength Index
A very simple indicator for looking for divergences. The chart clearly shows that there have been 2020 we have had two lower lows on price action but two higher highs on the RSI. This is clearly normal bullish divergence and suggest a trend reversal is coming. Even more importantly the RSI has climbed its way above the key level of 25 on this most recent bounce. One of the main things I am looking for is a swing low with hidden bullish divergence. A buy of a low with hidden bullish divergence is one of my most preferred buys for trades and investments.
Stoch RSI
The Stoch RSI is derived from from the RSI and helps confirm any divergences on the RSI. Seeing bullish divergence on the Stoch RSI helps confirm the fact that price action is turning the corner and ready to reverse. This indicator will be useful when combined with the EEM chart to help buy pull backs. It will also be useful to see any further bullish divergences.
Log MACD
The log MACD is undulating below zero Despite any bullish divergence we see we can know we are a long way away from seeing an impulse move upward on EEM/NDX while the LMACD is below zero. If we see the LMCAD with bullish divergences above zero then we can know that the move will be a lot more impulsive. As it stands, this is still time to accumulate EEM against NDX.
EEM
EEM has hidden bearish divergence on the 2020 C19 low to the low of October 2022. I am going to be looking for another low shortly to see what divergences can be seen. I hope to buy in against or below the monthly BB.
Another look with fewer indicators and some ambitious trend lines.
Conclusion
There is a lot of noise about financial resets and that can mean a lot of different things. For me, nothing totally resets but there are transition periods of major rotations. With emerging markets so low against the NASDAQ it seems likely they will benefit from rotation as people sell something that is overvalued (NDX Stocks, other US equities) and try to move into things that are comparatively undervalued.
A look at EEM is looking for a investment that can be held perhaps for decades or until some young’un wants to retire. There is probably a lot of consolidation and accumulation that needs to occur before any big move happens. But when it starts to move it should be quite impulsive for a index. But for now, lots of basing out and dip buying.
Emerging Markets Show A Corrective Decline For StocksEmerging markets show a corrective decline for stocks from technical point of view and from Elliott wave perspective.
Emerging markets chart with ticker EEM made sharp an impulsive rally at the end of 2022, which indicates for more upside after a corrective a-b-c setback that is actually still in progress since the beginning of 2023. So, for stock market support keep an eye on EEM chart, as they are in positive correlation.
With current slow down in the stock market, we can see it finishing wave »c«, but wave »c« has still room down to 61,8% Fibo. and 36-35 support area before market stabilizes.
$EEM bearish move?AMEX:EEM looks to be breaking down here. On OBV, there's been a double top. Price looks to be breaking the upwards trend that's been forming since Oct 2022.
I think price is likely to hit the second support level at $33 before bouncing. However, if there's a strong move down, can see it hitting $30 as well.
$EEM: Emerging Could EmergeFollowing the developments in AMEX:IZRL , AMEX:FM and AMEX:EEM we see a similar theme developing. Though this may appear to be a head and shoulders, emerging market stocks could be a smart bet while the Fed figures out what it will do next. We will look for support to be between where it is now and 37.5.
MSCI index viewAfter meaningful correction in global markets, especially ripple effect from US economy markets. MSCI index - Emerging markets are now at attractive valuations.
Technically, look at the monthly chart and the support trendline on it. Also, with the series of significant rate hikes by the US Federal Reserve and all global bankers - It seems the last leg of correction might come shortly.
Try to accumulate quality stocks in near future with 3 years long view, especially from NSE 200 basket