As of 10/23/2020
  Indus: 28,336 -28.09 -0.1%  
  Trans: 11,880 +131.58 +1.1%  
  Utils: 894 +2.40 +0.3%  
  Nasdaq: 11,548 +42.27 +0.4%  
  S&P 500: 3,465 +11.90 +0.3%  
YTD
-0.7%  
 +9.0%  
 +1.7%  
 +28.7%  
 +7.3%  
  Targets    Overview: 09/29/2020  
  Up arrow29,300 or 27,400 by 11/01/2020
  Up arrow12,000 or 11,000 by 11/01/2020
  Up arrow915 or 840 by 11/01/2020
  Up arrow12,800 or 11,300 by 11/01/2020
  Up arrow3,700 or 3,400 by 11/01/2020
CPI (updated daily): Arrows on 9/25/20
As of 10/23/2020
  Indus: 28,336 -28.09 -0.1%  
  Trans: 11,880 +131.58 +1.1%  
  Utils: 894 +2.40 +0.3%  
  Nasdaq: 11,548 +42.27 +0.4%  
  S&P 500: 3,465 +11.90 +0.3%  
YTD
-0.7%  
 +9.0%  
 +1.7%  
 +28.7%  
 +7.3%  
  Targets    Overview: 09/29/2020  
  Up arrow29,300 or 27,400 by 11/01/2020
  Up arrow12,000 or 11,000 by 11/01/2020
  Up arrow915 or 840 by 11/01/2020
  Up arrow12,800 or 11,300 by 11/01/2020
  Up arrow3,700 or 3,400 by 11/01/2020
CPI (updated daily): Arrows on 9/25/20

Bulkowski's Trade in EWA

 

EWA: Exit time for down under.

I am writing this on late Monday evening, and I have an order to sell this at tomorrow's opening. I last reported on this exchange traded fund back on April 22, which I wrote and posted the day before (4/21). The lower chart is from that blog entry and you can compare the two to see how price progressed.

After thinking about it, I decided to buy the fund. I placed a buy stop at 28.45 which filled on April 23 at a price of 28.42. I placed the buy order at 28.45 because I wanted to be sure that price cleared the highest high in the head-and-shoulders bottom chart pattern. In this case, that was the left armpit high at 28.34.

The MSCI Australia Index fund (EWA) on the daily chart

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EWA: Stop Placement

I placed a stop loss order at 26.07, below the right shoulder low (RS) and below the volatility stop of 27.04. I did not use the volatility stop because the fund gapped a lot and I felt it was more volatile than the number suggested (which does not make a lot of sense unless you believe that volatility has increased more in the last few days since a vol stop uses 22 trading days of data).

The MSCI Autralian Index fund (EWA) on the daily chart

The upside target was 29 (the site of a knot of congestion in December 2007 -- circled) on the chart to the right, with round number resistance at 30, and near the site of the old high in July 2007. I marked the high as point A (top chart), which peaks at 30.40. The recent high (today, Monday), is at 30.54. The mirror between these two is unmistakable, and mirrors are something I have focused on in some of my blog postings.

My guess is that price will begin to correct (move lower) because of that overhead resistance. I could be wrong, but the little profit I have in this trade (just over 6%), I want to keep. I also looked at 32 as being another source of resistance, so that is yet to come.

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EWA: Notebook

In my notebook, I wrote, "Buy reason: head-and-shoulders bottom with an upward breakout that pierced a down sloping trendline from the Oct 31 peak (arith scale). Price confirmed head-and-shoulders bottom with close above neckline. The only problem I see is that once price gaps upward, it almost always retraces the gain, dropping."

The last sentence was an interesting one and it rang true for this buy. The ETF dropped for several days after I bought but then recovered and moved up in a near straight-line run over the last week or two.

As price climbed, I moved the stop up. Here is my notebook entry for the stop placement.

I hope price gaps open higher...

The MSCI Australia index fund ETF on the daily scale

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EWA: Aftermath

As the chart shows, the timing of this one was just about perfect. I sold the day after price peaked. Since then, it has been a near straight-line drop.

In the figure, the bought and sold lines do not point to the prices at which the transactions occurred, rather to the days when they occurred.

I bought at 28.42 and sold at 29.97 for net gain of 5% in a month.

-- Thomas Bulkowski

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See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com. If you buy ANYTHING while there, they pay for the referral.

My novels:  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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