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The Japanese Market Move Could Be In Its Final Stages

ByDragonfly Capital
AuthorGregory W. Harmon
Published 03/21/2013, 02:15 AM
Updated 05/14/2017, 06:45 AM
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Since November the Japanese market ETF (EWJ) has been on fire, up over 20%. It seems like there is nothing that can stop it.

But perhaps their fondness for seafood might get in the way. The chart below shows that the Japan iShares ETF has been playing out a bearish Crab pattern. This culminates in the last leg higher reaching 161.8% of the initial down leg and 314% of the initial bounce higher. These bounds put a range of 10.95-11.39 on the price as a Potential Reversal Zone (PRZ).
EWJ

There are other signals that a top may be coming soon. The Relative Strength Index (RSI) is hovering in the high end of bullish territory and the Moving Average Convergence Divergence indicator (MACD) is near an extreme on the signal line. Also the price has moved to 5.6% above the 50 day Simple Moving Average (SMA). It has been as far as 8% above before correcting so not extreme yet but elevated.

None of these are a guarantee that a pullback will occur soon. Nor are they a guarantee that the price will continue higher towards the PRZ. They are signals that suggest you start looking at the chart a bit more often and refresh your exit plan.

Disclosure: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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