A sign that Emerging Markets (EEM) have bottomed

The EEM ETF is showing some signs that the worst is behind us. Firstly, the market has made a double-bottom, first fall on the 22nd June, and then the second last week on the 15th August. Double-bottoms flush out the weaker hands, who tried to pick the bottom in June. Empirically markets are more likely to rally following the second capitulation.

Secondly, the price is showing a divergence from its indicators below. The indicators showing 'higher-low', while price shows 'lower-low'. The key is to trade using the indicator, and this divergence of the two is bullish . Thirdly, the ETF bottomed last Wednesday the 15th, with the day forming a Doji candle. This candle means the market opened and closed near the same price, a sign that the selling frenzy is over and the market is reversing. Doji candles often mark reversals.


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