Hovering At Resistance

After Wednesday’s huge run-up, Emerging Markets (EEM) is now hovering at resistance.

Reportedly, there’s a Xi ‘Put’, in place to make sure China and related markets don’t go down.

Never mind that Wednesday’s massive EEM, launch had all the looks of a bear market short squeeze.

From a technical standpoint, several items stand out.

First: Price action’s at support (now resistance) that was determined this past February 24th, on (supposed) news of a Russian invasion.

Second: That resistance level (as shown below) is at a Fibonacci 23.6%, retrace. A 23.6%, retrace that ‘sticks’ is rare; markets tend to go at least to 38.2%, or 50%, before resuming their main trend.

Emerging Markets EEM, Weekly

We’ll start first, with the un-marked weekly chart.

The entire leg lower with 23.6%, retrace.

Now, on to the daily timeframe.

It’s important to note, the first hour of trading, EEM posted a new recovery high just 0.03-pts above Wednesday’s high.

Analysis Tip

The market goes where there are orders.

At this point (mid session), there’re not enough orders for EEM to continue significantly upward.

Summary

Risk may have been reduced for a short position via EDZ (not advice, not a recommendation).

If we get an EEM reversal, the shallow Fibonacci retrace indicates extreme weakness and therefore, downside opportunity is significant.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279