Sunday, November 29, 2020 8:30 AM EDT
Emerging markets reached a breakout level, and it looks like they are ready to move higher and confirm their breakout. If this ‘breakout’ in emerging markets continues it may be ‘breaking news’ for investors. The point is that emerging markets went through a period of flat trading. Some call it the ‘lost decade’. Are emerging markets finally ready to trend higher, without their uptrend being stopped yet another time? It might be, and our forecast on emerging markets is certainly bullish.
The long term, weekly EEM ETF chart makes the point.
The uptrend that started in April of this year is still intact, after 8 months. More importantly, this uptrend brought EEM to a level not seen since January of 2018.
The chart structure the way we see and understand it certainly suggests more upside. And that’s the whole point: a bit more upside will bring EEM above its previous highs, right at a time when it’s right above the median line of its current uptrend.
That’s how we read charts: combine ongoing price action with medium term + longer term trends. If they confirm each other, great, it increases our confidence level. If there is a divergence, not so great, and ‘better safe than sorry’ applies.
The emerging markets chart confirms bullish ongoing price action with bullish medium and long term trends. This makes us think that the setup may be explosive in 2021, with a very attractive profit potential.
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