UAE, RUSSIA, TURKEY, POLAND

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Wishing everyone a healthy and prosperous new year. I would like to finalize the blog posts in 2016 with some of the good chart set-ups in the Emerging Markets that are likely to resolve into trends in 2017. A detailed update on Developed Markets will follow in the first week of the new year.

ISHARES MSCI EMERGING MARKETS ETF (EEM)

ISHARES EMERGING MARKETS ETF listed in the NYSE is trying to rebound from 34 levels with a positive divergence on the MACD. The big question is will this prove to be a double bottom and put a medium-term low for the emerging markets. If yes, the implication is positive at least for the first half of 2017. For now we can say that EEM is forming a range between 34 and 36.5.

ISHARES EM - DAILY SCALE

ISHARES EM – DAILY SCALE

 

DUBAI FINANCIAL MARKET GENERAL INDEX (.DFMGI)

DUBAI FINANCIAL MARKET GENERAL INDEX is forming a 9 month-long rectangle. The boundaries stand at 3,200 and 3,620. 3,620 was tested for 3 times over the past 9 months. Rectangle is usually considered to be a continuation chart pattern. This implies a possible breakout on the upside. Breakout above 3,620 levels can result in an upward momentum for the UAE equities in 2017.

DFMGI – WEEKLY SCALE

METHAQ (METH.AD)

METHAQ is an insurance company listed in the UAE exchanges. A similar chart pattern is developing on the stock price. A well-defined 9 month-long rectangle has boundaries between 0.965 and 0.75. Breakout above 0.965 will suggest higher prices with a chart pattern initial price target of 1.20. Inefficiencies in some of the emerging markets usually result in uninterrupted trend periods. Breakouts from these type of well-defined trading ranges can be very rewarding.

METHAQ – WEEKLY

BANK VTB PAO (VTBR.MM)

Bank VTB PAO is a Russia-based company, which is engaged in commercial banking sector. Price chart of the stock is forming a 19 month-long symmetrical triangle. While the stock trades in decimal units, the width of the symmetrical triangle has now reduced to 12% range. Breakout from the lengthy consolidation can result in a strong trend period. Emerging market funds and traders/investors who are active in Russia should benefit from a possible upward breakout.

BANK VTB - WEEKLY SCALE

BANK VTB – WEEKLY SCALE

ADIRA FINANCE (ADMF.JK)

Adira Finance is a conventional consumer financing company listed in Indonesia. Stock price is recovering from its losses in 2015 and the uptrend that started in 2016 can still have legs. Over the past 4 months price formed a rectangle continuation. Strong breakout from the 4 month-long sideways consolidation can result in a positive first quarter for the stock. Rectangle price target is at 7,600 levels.

ADIRA FINANCE - WEEKLY SCALE

ADIRA FINANCE – WEEKLY SCALE

PEKAO BANK (PKO.WA)

BANK POLSKI SA is a Poland-based commercial bank. It is listed in Warsaw Stock Exchange with USD 8.3 billion market cap. Stock price is forming a year-long base formation. The chart pattern can be identified as a complex H&S bottom. A daily close above 28.60 will confirm the breakout from the year-long bottom reversal.

PEKAO BANK - WEEKLY SCALE

PEKAO BANK – WEEKLY SCALE

AKBANK (AKBNK.IS)

AKBANK is a commercial bank listed in Istanbul Stock Exchange. Several financial companies including the benchmark equity index in Turkey has similar chart pattern development. AKBANK is forming a 3 year-long symmetrical triangle which is now very close to a possible breakout. 8.5 level is the upper boundary of the long-term consolidation range. A positive development is taking place worth mentioning on the daily scale charts. 2 month-long H&S bottom is possibly forming with the neckline standing at 8.0 levels. Both the daily and the weekly scale charts have positive implications for the new year.

AKBANK - WEEKLY SCALE

AKBANK – WEEKLY SCALE

AKBANK - DAILY SCALE

AKBANK – DAILY SCALE

SK TELECOM (017670.KS)

SK TELECOM CO. LTD. provides wireless telecommunications in Korea. developing chart pattern on this stock has two interpretations. The bullish interpretation is that the stock is forming a year-long ascending triangle with the horizontal boundary standing at 233K. Ascending triangles are usually bullish chart patterns that resolve with a breakout above the horizontal boundary. Such price action will result in a massive H&S top failure and should be considered positive for SK TELECOM in 2017. The bearish interpretation is that the stock is forming a multi-year H&S top with the neckline standing at 195K. In this case the year-long ascending triangle will break on the downside resulting in a sharp sell-off towards the 195K levels. A decisive breakout from the year-long ascending triangle will take place in the following weeks.

SK TELECOM - WEEKLY SCALE

SK TELECOM – WEEKLY SCALE

 

CENTRAL EUROPE, RUSSIA & TURKEY

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CENTRAL EUROPE, RUSSIA & TURKEY (CEE)

CEE is a closed-end fund listed in the NYSE. The fund seeks long-term capital appreciation through investment primarily in equity or equity linked securities of issuers domiciled in Central Europe, Russia and Turkey. A new chart pattern breakout signal is triggered with a strong weekly close on CEE. Price chart of CEE completed a year-long H&S bottom by clearing the strong horizontal resistance at 19.55 levels. From a charting perspective there are several positive interpretations of the latest price action. While the larger scale chart pattern can be identified as a H&S bottom, the right shoulder of the base formation took the form of a bullish ascending triangle. Both chart patterns were completed this week with a decisive breakout above the horizontal boundaries. Ascending triangle price target stands at 21.75 levels. Year-long H&S bottom price target stands at 24.35 levels. A long trade is entered at the close of the week with stop-loss at 19.1. The CEE fund is managed by Deutsche Bank and latest publicly available holdings and the composition of the fund is shown on their website. For more information you can visit Deutsche Asset Management page.

CEE - WEEKLY SCALE

CEE – WEEKLY SCALE

CEE - DAILY SCALE

CEE – DAILY SCALE

HONG KONG – SUNAC CHINA HOLDING

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SUNAC CHINA HOLDING (1918.HK)

A new chart pattern breakout signal is triggered on Hong Kong listed SUNAC CHINA HOLDING. After its 6th test, SUNAC broke out of a year-long rectangle with a strong daily bar and increasing volume. If the stock manages to hold on to gains by the end of the week, it will also register a strong weekly close. Breakouts from horizontal trading ranges are usually reliable. Today’s strong close pushed the price well above the horizontal resistance at 6.05 levels and the breakout confirmation level at 6.23. A long trade is entered with stop-loss at 5.90. Rectangle chart pattern price target stands at 7.7 levels. Failure to hold above 6.05 levels in the following days/weeks will put the bullish interpretation in question.

SUNAC CHINA HOLDING - WEEKLY SCALE

SUNAC CHINA HOLDING – WEEKLY SCALE

SUNAC CHINA HOLDING - DAILY SCALE

SUNAC CHINA HOLDING – DAILY SCALE

GERMANY DAX INDEX

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GERMANY DAX INDEX - DAILY SCALE

GERMANY DAX INDEX – DAILY SCALE

Germany’s DAX Index breaks out of a 4 month-long rectangle chart pattern with a possible break-away gap. Tech Charts blog drew attention to the developing chart pattern in the last week of November (Germany Dax Index – 20/11/2016). Today’s price action cleared the strong 4 month-long horizontal resistance at 94.60 levels. For common stocks, Edwards and Magee in their book Technical Analysis of Stock Trends suggest that for a breakout confirmation a daily close by a 2.5%-3% margin above resistance level is required. While, this margin can be perfectly fine for stocks, for indices, commodities and currencies it could result in a delayed entry. More appropriate threshold could be a daily close by a margin of 0.5%-1% above the resistance area for indexes, commodities and currencies.

Breakout on Germany’s DAX index cleared that threshold (grey dashed line at 10,910) with a strong daily close and confirmed the breakout from the 4 month-long rectangle chart pattern. Rectangle is a continuation chart pattern. Breakout not only took place with a strong daily close but also with a possible break-away gap. Richard Schabacker in his pioneering research (Technical Analysis and Stock Market Profits) on classical charting, explains break-away gaps as follows:

Break-away gap appears at the beginning of a movement and generally comes at the completion of some definite area formation. It is seldom covered for some time in the future and, when it proceeds from a strong major bottom formation, it may never be covered, or at least not until the return of prices in the next great cycle some years later. The Break-away gap is comparatively uncommon and indicates a definite change in the technical picture…The logical conclusion is, therefore, for a continuation of that strong movement in the direction toward which the gap was made.

As a matter of fact, it is always difficult and frequently impossible to be certain whether a gap is of the Common or Break-away variety at the instant that the gap appears. This is the principal reason why we cannot place too much credence in the various gap theories and why we must consider gaps as of only secondary importance in forecasting. The fact remains that most gaps which lead decisively out of an established pattern are not closed; they become and remain true Break-away gaps. And the wider the Break-away gap at the breakout, the less likely it is to be closed.

In brief, the Break-away gap emphasizes the breakout of prices and indicates a sudden change in the technical picture, but the mere fact that prices have broken decisively out of a technical formation is of greater importance than the gap. When the evidence of the gap is added to all the other evidences of a decisive breakout, we are encouraged to act promptly and decisively.

For stock traders, I attached below the ISHARES DAX UCITS ETF that is listed in Germany. Price chart of the ETF is very similar to the index as it tracks the performance of the XETRA DAX index. The upper boundary of the rectangle was standing at 94.60. With the decisive breakout I initiated a long position with a stop-loss slightly below the boundary at 93.30 levels. Rectangle chart pattern price target is at 100 levels for the ISHARES DAX ETF. Tech Charts twitter followers can find chart pattern breakout signals under #TECHCHARTSALERT

ISHARES DAX UCITS ETF - DAILY SCALE

ISHARES DAX UCITS ETF – DAILY SCALE

PORSCHE AUTO HOLDING (PSHG_p.DE)

Strength in European equities can gain momentum. A chart that is currently on my watch list is PORSCHE AUTO HLDG  listed in Germany. Stock is possibly forming a year-long symmetrical triangle that could act as a bottom reversal if the price can clear strong resistance area between 49.65 and 50. A decisive close above 50.85 levels will confirm the breakout from the long-term sideways consolidation. Tech Charts twitter followers can find developing chart patterns under #TECHCHARTSWATCHLIST

PORSCHE AUT HLDG - WEEKLY SCALE

PORSCHE AUT HLDG – WEEKLY SCALE

METASTOCK

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Dear Tech Charts followers,

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Regards,

Aksel Kibar

HONG KONG and CHINA

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China and Hong Kong listed equities had a strong performance over the past week. Hang Seng index rebounded from its 200 day average and the lower boundary of its possible 8 month-long upward trend channel. China SSE Composite index resumed higher trading above its 200 day average after clearing the horizontal resistance at 3,100 levels. Both Hang Seng index and China SSE Composite index can help emerging markets to gain strength in the coming weeks.

SSE COMPOSITE INDEX weekly scale price chart

SSE COMPOSITE INDEX weekly scale price chart

HANG SENG INDEX weekly scale price chart

HANG SENG INDEX weekly scale price chart

A new chart pattern breakout signal is triggered with a strong weekly close on the Hong Kong listed SHUN TAK HOLDING. Price chart of the stock completed a year-long text book H&S bottom. White long candlestick on the weekly scale chart not only cleared the year-long horizontal resistance but also recorded a high volume adding to the strength of the weekly scale breakout. H&S bottom chart pattern price target stands at 3.35 levels. A stop-loss is placed at 2.70 levels, slightly below the horizontal resistance (neckline). Tech Charts twitter followers can find all past breakout signals under the hashtag #TECHCHARTSALERT

SHUN TAK HOLDING weekly scale price chart

SHUN TAK HOLDING weekly scale price chart

SHUN TAK HOLDING daily scale price chart

SHUN TAK HOLDING daily scale price chart

Two stock charts are preparing for a long-term change in trend. Both names are in the Tech Charts watchlist. Breakout on these securities will trigger a chart pattern breakout signal and will be considered for possible long trades. Tech Charts twitter followers can find stocks that are in the watchlist under the hashtag #TECHCHARTSWATCHLIST China Galaxy Securities is a financial company listed in Hong Kong. The stock price is forming a year-long ascending triangle with the strong horizontal resistance standing at 8.10 levels. Breakout above 8.10 can confirm the ascending triangle as a reversal and suggest higher levels. Kingston Financial is also listed in Hong Kong. Stock price is challenging the upper boundary of a year-long symmetrical triangle. Breakout above 3.75 levels can start a new uptrend.

CGS weekly scale price chart

CGS weekly scale price chart

KINGSTON FINANCIAL weekly scale price chart

KINGSTON FINANCIAL weekly scale price chart

GERMANY DAX INDEX

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Germany’s DAX Index is forming a 4 month-long rectangle chart pattern. Rectangles are classified as continuation chart patterns. Breakouts are usually in the direction of the previous trend. Since the beginning of 2016, DAX index is in a uptrend. Since mid-August the index has been in a sideways consolidation between 10,200 and 10,800. The index tested the upper boundary of the rectangle for four times over the past four months. Breakout above 10,800 will be positive and suggest higher levels. Chart pattern price target stands at 11,400 levels.

WEEKLY SCALE PRICE CHART OF DAX INDEX

WEEKLY SCALE PRICE CHART OF DAX INDEX

DAILY SCALE PRICE CHART OF DAX INDEX

DAILY SCALE PRICE CHART OF DAX INDEX

There are DAX index futures contracts and index ETFs to trade the price action on the possible breakout. Below is the price chart of the Ishares DAX UCITS ETF (in EUR) listed in Germany. It is one of the most liquid instruments that tracks the performance of the DAX 30 index. On the Ishares DAX UCITS ETF, upper boundary of the rectangle stands at 94.60 levels.

DAILY SCALE PRICE CHART OF ISHARES DAX UCITS ETF

DAILY SCALE PRICE CHART OF ISHARES DAX UCITS ETF

ACWI and EEM

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Since the election in the first week of November, U.S. equities had a strong performance. Though, strong rally in U.S. equities has been limited to very few sectors. ACWI ETF (underlying instrument: MSCI All Countries World index that tracks the performance of the 23 developed and 23 emerging markets) has been in a correction since the beginning of September. EEM ETF (underlying instrument: MSCI Emerging Markets index) broke down two major support levels, a year-long upward trend line and a horizontal support at 35.88 levels.

There is a possibility of the latest downward trend channel to form a flag continuation and breakout higher without breaching the year-long uptrend on the ACWI ETF. However, failure to do so can result in a similar price action that we have seen on the EEM; a breakdown of the year-long trend line support. Both charts suggest that equity market strength is limited to U.S. equities and in the U.S. markets it is limited to very few sectors.

ACWI ETF weekly scale price chart

ACWI ETF weekly scale price chart

ACWI ETF daily scale price chart

ACWI ETF daily scale price chart

EEM ETF weekly scale price chart

EEM ETF weekly scale price chart

S&P 500 INDEX and VIX

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S&P 500 INDEX weekly scale price chart

S&P 500 INDEX weekly scale price chart

S&P 500 index is resting on the 2 year-long support/resistance level. Breakout to all time highs in July 2016 was followed by a weak rally in July-August period. Since mid-August the index has been in a sideways consolidation. The pull-back reached the previously broken resistance at 2,120 levels. Price action in the September-October period can be identified as a descending triangle with the horizontal boundary (support) standing at 2,120 levels. Over the past two months the S&P 500 index tested the strong support for 3 times. Breakdown below 2,120 levels will signal further correction for the U.S. Equities.

CBOE Volatility index is consolidating between 13 and 17 levels. Breakdown below 2,120 on the S&P 500 index could also result in a breakout on the VIX. The level to watch on the CBOE VIX is 17.35. If S&P 500 index manages to hold above 2,120 levels, last two months sideways consolidation will be labelled as a pull back and we will expect new highs in the coming months. In that case 17-18 area should become a medium term high for the CBOE VIX.

S&P 500 INDEX daily scale price chart

S&P 500 INDEX daily scale price chart

CBOE VOLATILITY INDEX daily scale price chart

CBOE VOLATILITY INDEX daily scale price chart

ENERGY and EQUITIES

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WTI CRUDE OIL and BRENT CRUDE OIL prices are developing bullish chart patterns. Year-long inverse H&S chart patterns are close to completion. Both WTI Crude and Brent Crude are challenging their necklines. For Brent Crude oil the year-long horizontal resistance stands at $52 levels. For WTI, the neckline stands at $50 levels. Breakout above the strong resistances can push prices towards $70 levels in the following months. $70 is the possible H&S bottom price target.

WTI CRUDE OIL weekly scale price chart

WTI CRUDE OIL weekly scale price chart

BRENT CRUDE OIL weekly scale price chart

BRENT CRUDE OIL weekly scale price chart

Similar bullish technical outlook can be identified on several equities in the energy sector and energy related exchange traded funds. Below are some of the equities from Tech Charts watchlist. Note: According to Edwards & Magee a breakout is confirmed when a stock records a daily close above the resistance by 3% margin. Levels on the charts below take this guideline into consideration.

OMV AG an Austria based integrated oil and gas company forms a year-long symmetrical triangle. Stock has been challenging the upper boundary of its consolidation. Breakout above 26.5 levels should generate fresh chart pattern breakout signal.

omv-ag

CHINA OIL & GAS Group limited is a Hong Kong based investment holding company principally engaged in natural gas and energy-related businesses. A decisive close above 0.65 will confirm breakout from year-long H&S chart pattern.

china-oil-gas

PREMIER OIL is an independent exploration and production company with oil and gas interests in the North Sea, South East Asia, Pakistan, the Falkland Islands and Latin America. The company is engaged in the business of upstream oil and gas exploration and production. Since the beginning of May 2016 the stock has been forming a rectangle (continuation) chart pattern with the boundaries between 59.75 and 80.35. A decisive close above 82.40 will confirm breakout from the 6 month-long rectangle chart pattern.

premier-oil

CANYON SERVICES GROUP provides stimulation and fluid management services to oil and gas exploration and production companies operating in the Western Canadian Sedimentary Basin. The company’s segments include Pressure Pumping Services and Fluid Management Services. Price chart of the, Toronto Stock Exchange listed Canyon Services has a text-book H&S bottom chart pattern. Year-long base formation has a horizontal resistance (neckline) at 5.87 levels. A decisive close above 6.05 will confirm breakout from the year-long H&S bottom.

canyon-services

HALLIBURTON COMPANY is a provider of services and products to the upstream oil and natural gas industry. Price chart of the U.S. energy stock formed an inverted triangle with the horizontal boundary standing at 46.85 levels. Over the past 4 months, the resistance was tested 3 times. Breakout above 48.30 levels will complete the multi month consolidation.

halliburton

LAREDO PETROLEUM is an independent energy company focused on the acquisition, exploration and development of oil and natural gas properties, and the transportation of oil and natural gas from such properties primarily in the Permian Basin in West Texas. Price chart of Laredo Petroleum is forming a year-long H&S bottom with the neckline standing at 13.70 levels. A decisive close above 14.15 levels will confirm breakout from the bullish base formation.

laredo-petr

HELIX ENERGY is an international offshore energy services company. The company provides services to the offshore energy industry with a focus on well intervention and robotics operations. Price chart of HELIX ENERGY formed a 5 month-long symmetrical triangle. Breakout is underway with the strong weekly close of last week’s price action.

helix-energy

GEOSPACE TECHNOLOGIES CORP designs and manufactures instruments and equipment used in the oil and gas industry to acquire seismic data in order to locate, characterize and monitor hydrocarbon producing reservoirs. GEOSPACE TECHNOLOGIES formed a year-long H&S bottom with the neckline standing at 19 levels. A decisive close above 20 levels will confirm breakout from the multi-month bullish chart pattern.

geospace-techn

ISHARE GLOBAL ENERGY ETF is an exchange traded fund listed in the NYSE. The price chart of the energy ETF has a similar year-long H&S bottom with the neckline standing at 33.15 levels. A decisive close above 34.10 will confirm breakout from the multi-month base formation. The right shoulder of the H&S bottom can be identified as a rectangle with the boundaries standing at 30.50 and 33.15.

ishares-glob-energy