EEM, an iShares MSCI Emerging Markets ETF, complies very well with technical analysis levels as we can make 4 observations based on this chart. Based on price action, a 2018 top may or may not be in but traders will have to incorporate this resistance
EEM ETF has spent the last 3 months above a prominent 6-year resistance. This could be a sustainable development. At face value, I feel it is more attractive than stocks in countries that are only driven by financial expansion.
I share my observations of DAX30, EEM, Nasdaq 100. Considering how stock indices have been exceptionally risk-averse, exuberant, buoyant, I consider all these setups here as high risk.
AUDJPY used to be a very good indicator of ‘intermarket correlation’. It clearly tracked Asian stock market indices such as Hang Seng Index, Singapore Index Futures (SiMSCI) and MSCI Emerging Markets Index (EEM). The positive correlation could be due to 2 dynamics:
AUD tends to do well when Asian economies like China are doing well (think of Australian exports of iron ore, other commodities)
JPY tended to strengthen due to repatriation when its stock market i.e. Nikkei 225 is not doing well (which also tracks Asian indices).
At the moment AUDJPY has diverged from Hang Seng Index and EEM; a convergence of the three requires 1) strengthening AUDJPY or 2) deflating HSI and EEM.
AUDJPY has a positive correlation with EEM, HSI, SiMSCI and China A50 but with the widening divergence now, AUDJPY is too bearish or stock indices have some catching up.