Emerging Markets Approaching H&S Target $EEM
iShares MSCI Emerging Markets ETF($EEM) Weekly: $EEM completed its inverse Head and Shoulders pattern, breaking out of its neckline resistance back in July 2016. For H&S targets, we take the distance from the peak (of the head) to the neckline, in this case comes out to around 8, then project out the potential target level from the breakout (or breakdown when not inverted) point, which puts us right about $42.70. Currently, $EEM closed the week at $41.61, so about a point shy of the drawn H&S target. Also approaching the 2.0 mark on the fib expansion lines. So one would think that this will provide a point of resistance before going further.
One should note here that the RSI is in overbought territory near this target, so that along with the MACD is something to keep an eye on to see when and how much this may correct for a breather before making its next move. I also wanted to note how #EEM made a higher RSI level contrary to the lower price level (at the “head”), making a bullish divergence, and continued to do so with the right shoulder. This should have been a flashing sign that the this ETF was about to make a break higher, and it would have gave two chances, one at the breakout point of the resistance and the retracement double bottom to the neckline at the end of 2016 year.
One should note here that the RSI is in overbought territory near this target, so that along with the MACD is something to keep an eye on to see when and how much this may correct for a breather before making its next move. I also wanted to note how #EEM made a higher RSI level contrary to the lower price level (at the “head”), making a bullish divergence, and continued to do so with the right shoulder. This should have been a flashing sign that the this ETF was about to make a break higher, and it would have gave two chances, one at the breakout point of the resistance and the retracement double bottom to the neckline at the end of 2016 year.