Chile is Flirting with Former Support
- Posted by JC Parets
- on April 2nd, 2014
One of the things that we pride ourselves on is the ability to use our tools as technicians to look at countries all over the world. The charts represent the price history so we can compare countries and regions with each other to see where the strength is and which countries are weaker.
Today we are focusing our attention on one of the worst bear markets on earth. Chile would need to rally over 75 from current levels just to get back to where they were 3 years ago. Chile is not only underperforming Equities as an asset class, but it is some how undereprforming emerging markets as a group. This has been one of the worst places to be for years. Last year for example, Chile lost 25% for 2013 with the S&P500 was UP 30%.
The reason I find this chart interesting is because with the recent strength out of emerging markets the last couple of weeks, the iShares MSCI Chile ETF $ECH has managed to rally back to last year’s critical broken support:
We know from our polarity principles that former support should become resistance on the first attempt to get back above. In this case, demand overwhelmed supply around the $46 level in August and again throughout December. Once supply took control, prices declined another 13%. Now that we’re back towards 46, will the overhead supply take over once again? Or is there enough Demand to break through?
Here is the longer-term view so we can see how important this level is from a structural perspective. Now only was it support during the second half of last year, but it also represents the 61.8% Fibonacci Retracement from the entire 2008-2010 rally. It will be interesting to see if the bulls can manage to regain control of this 46 level. If it does, there is a ton of upside in this name.
A real breakout and rally here in Chile could tell us a lot about emerging markets as a group. With Chile as one of the worst in the space, new leadership there would be telling.
REGISTER HERE for more information on how to access this top/down technical analysis for the rest of the global stock market averages.
Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.blog comments powered by Disqus
J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He is a 10-year veteran and Market Technician who actively manages money incorporating Technical Analysis and Behavioral Finance into his practice. JC’s work has been featured regularly on CNBC, Fox Business, Bloomberg, Business News Network, Wall Street Journal and Yahoo Finance among many other financial media outlets. More...
- Canadian Dollars Are About To Explode Higher
- Gold Looks Ready For Its Next Leg Lower
- Video: Technical Analysis Webinar by JC Parets
- Is Yen Setting Up For An Epic Rally?
- Emerging Markets Are Still A Problem
- Find Your Edge: The Autumn 2015 AlphaShark Trading Symposium with a Presentation by J.C. Parets
- Can Financials Correct 30% From Their Highs?
- Overhead Supply in the Dow Components
- Overhead Supply in Healthcare & Biotech
- Thinking Out Loud Heading Into Q4
Archive by Year