{"id":11039,"date":"2012-04-11T03:16:44","date_gmt":"2012-04-11T07:16:44","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=11039"},"modified":"2012-04-11T03:16:44","modified_gmt":"2012-04-11T07:16:44","slug":"canada-country-etf-head-and-shoulders","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2012\/04\/11\/canada-country-etf-head-and-shoulders\/","title":{"rendered":"Chart Review: Canada Index Fund ETF Printing A Major Topping Pattern"},"content":{"rendered":"

Last year I made the case for investing in Canada in 2012 (see “Buying Canadian On Expectations For Stronger Growth<\/a>“). I have only made one move since then (buying Encana Corporation (ECA) on weakness in natural gas prices<\/a>) as I continue to wait for discount prices. I thought just such an opportunity had arrived in the iShares MSCI Canada Index Fund ETF (EWC) as it re-approaches its QE2 (quantitative easing 2) reference price. I define the QE2 reference price as a first buying point for accumulating shares in the midst of any sell-off or crash in commodity prices<\/a>. I stopped short after noticing a potential topping pattern: the infamous head and shoulders (H&S).<\/p>\n


\n
\"EWC<\/a>
EWC appears to print a topping pattern<\/figcaption><\/figure>
\nSource: FreeStockCharts.com<\/a><\/strong>
\n<\/center><\/p>\n

The H&S pattern makes EWC look like it made a failed effort to retest post-recession highs. The right shoulder confirms the exhaustion of buying power to make another challenge anytime soon. I almost never short based on a head and shoulders pattern because they seem to deliver so many false signals. The typical trigger for a short is the a break below the neckline of the H&S pattern (see the dark black line). In this case, I am keeping my buying finger on pause for now given the increasing weakness in the market in general<\/a>. Moreover, current prices only take EWC back to the beginning of the year. With only 7% of upside to the right-hand side of the chart, I prefer to wait for an additional discount to improve the potential risk\/reward balance.<\/p>\n

Full disclosure: long ECA<\/p>\n","protected":false},"excerpt":{"rendered":"

Last year I made the case for investing in Canada in 2012 (see “Buying Canadian On Expectations For Stronger Growth“). I have only made one move since then (buying Encana Corporation (ECA) on weakness in natural gas prices) as I continue to wait for discount prices. I thought just such an opportunity had arrived in … Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[235,62],"tags":[685,455,820,1597],"class_list":["post-11039","post","type-post","status-publish","format-standard","hentry","category-canada","category-technical-analysis","tag-commodities-crash-playbook","tag-ewc","tag-ishares-msci-canada-index-fund-etf","tag-technical-analysis"],"yoast_head":"\nChart Review: Canada Index Fund ETF Printing A Major Topping Pattern - ONE-TWENTY TWO: Trading Financial Markets<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/drduru.com\/onetwentytwo\/2012\/04\/11\/canada-country-etf-head-and-shoulders\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Chart Review: Canada Index Fund ETF Printing A Major Topping Pattern - ONE-TWENTY TWO: Trading Financial Markets\" \/>\n<meta property=\"og:description\" content=\"Last year I made the case for investing in Canada in 2012 (see “Buying Canadian On Expectations For Stronger Growth“). 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