Are Emerging Markets about to “Submerge” and head a good deal lower? What they do at (3) will go a long way in answering this question!
Emerging Markets ETF (EEM) has been lagging the broad market for the past 15-months. They hit their 50% retracement level of the last year’s highs and lows and falling resistance at (2) recently. The weakness of last has EEM trading below its 200-MA line.
EEM has spent the majority of the past 3-years inside of rising channel (1), which reflects that this trend remains up. The weakness of late has it testing the bottom of its rising channel at (3), which becomes an important test of support.
If this support fails to hold at (3), look for the Emerging markets ETF to attract selling pressure. The next important support test after that is the 2017 lows, which is around 5% below current prices.
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