Confirming A Double Bottom

After a year of pain, Emerging Markets have shown signs of life in the New Year. 2018 saw the the Emerging Markets ETF ($EEM) lose nearly 30% of its value as it steadily moved lower through October. Consolidation through the end of the year gave a glimmer of hope that the worst was over. And then the ETF started to move higher in January.

Last week it moved over the December bounce high, making its first higher high. Then it moved up over the 200 day SMA, where it had not been since May. It retraced more than 38.2% of the drop as that happened. Now it is back at the September bounce high. A move over that would confirm a Double Bottom.

Confirmation would set a next target at a 61.8% retracement of the downward leg to 46.55. It will also likely attract major inflows of capital. That does not mean it stops there. Momentum supports a continued move higher with the RSI breaking a 12 month range and moving into the bullish zone. The MACD also points higher with it positive and rising.

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