Fib Lines go International

Welcome back traders.

One key theme which is producing some good returns so far this year is international markets. Take a look at the graphic on the left and you can see that symbols like EEM, EFA and FXI have under performed their US counterparts over 2 year and 5-year time horizons.

But on a year to date basis, note how these key international ETF's are outperforming comparable US markets. Now that Europe has figured out that QE works, those markets have a lot of catching up to do.  So along those lines, I thought it would be a good time to visit Fib Lines for some key international items.

First up in the US Dollar as measured by the dollar index which is up about 20% in the past 3 months
after breaking out to a new 10-year high back in December of 2014.

I found the beginning of Elliot Wave 1 at the low at 70.69 and the high at 89.5 which was an area of resistance going as far back as 2006.  Since then the tree lines have been doing a fairly good job bracketing the price action.  Note the next major point of resistance is the 161% red line up at 101.15.   I also added the US Dollar Index futures /DX which has a very similar interpretation.

Next up are key international ETF's EEM and EFA.  Both are up nearly 10% year to date,  Both ETF's have similar interpretations as most US markets putting in the bottom and top of wave 1 between March and June of 2009.

Next up is FXI, the iShares China Large Cap ETF.  This index was up about 10% as of the end of March and has since then ripped up to a series of new 4 then 10 year highs.  As of now, FXI is up nearly 23% for the year and looking at the longer term chart, has higher to go to the upside with no serious resistance until up in the 54 area.

I struggled mightily with this chart over a period of days and could not find an interpretation that made any sense.  I finally settled the setup as shown in this monthly chart with supporting points as follows:

- Start of wave 1 is at the low at 20.90 set back in 2008

- End of wave 1 is at 31.27 which has been a point of support several times since then

- Price tagged the 261% line and were deflected back

In the past 6-7 years price seems to have more or less pivoted around the 161% line finding resistance at the overhead tree line.  Once price took out the 261% line at 48.05, it was off to the races to the upside.  I still expect higher prices ahead and I am long via the June 47 calls.

Finally, I added support for the Dow Indexes $DJI (Industrials) $DJT (Transports) and $DJU (Utilities) at the request of a group member.

If you want to get your hands on free Fib lines indicator for TOS send an e-mail to:

fx-mon-subscribe@yahoogroups.com

Good trading and may the odds be ever in your favor.