How ETF Charts Can Reveal Global Market Direction
The importance of ETF charts is considerable when you need to identify shifts in markets and plan your trading moves accordingly
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In stock trading and investing, studying charts is important for technical analysis. When it comes to ETFs (exchange-traded funds), studying charts of ETFs focusing on a specific niche can enable you to identify any momentum shifts in a particular sector. Analyzing niche ETFs and then expanding those findings through the various other segments in order to identify underlying trends is one of the techniques. Charts can give a good picture. So it’s worth analyzing charts of some ETFs comprising global leaders of the equities markets. That should provide a clearer picture of the positions the traders would like to take in the coming weeks or months. Investopedia’s Casey Murphy has selected a few of these. Death Cross and Indication of Long Term Downtrend First stop is the Vanguard Total World Stock ETF ($VT). It has total net assets amounting to nearly $17 billion with over 8,150 holdings. With so much in store, $VT provides traders with a really cost-effective method to track performances of markets that are wellestablished as well as those that are still in the developing stage. Let’s check out the chart below by StockCharts.com and presented in Murphy’s Investopedia article:
The chart reveals that the price has just moved beneath an ascending channel pattern’s support. The blue circle reveals the breakdown that has brought about a bearish crossover between the moving averages of 50 days and 200 days. This situation is a death cross. The blue arrow indicates a sell sign in the long term. This can be indicative of a downtrend beginning in the long term. And without any obvious sign of reversal, the bullish traders would want to lay low.
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A Sharp Sell-off and New Resistance Next, Murphy moves to exposure to the largest attractive to traders as of two major support levels.
the iShares Global 100 ETF ($IOO). This gives traders some companies in the world. Specifically, the ETF has made itself now because of the fact that the ETF has managed to break below Let’s look at this chart by StockCharts.com.
The chart reveals that quite a sharp sell-off has been triggered by the close beneath the trend line and the break below the moving average for 200 days. The blue arrow indicates the new resistance. The price has not managed to move back above the resistance. This can be an indication that the bulls are getting unsure about their convictions during the uptrend. Traders will most likely be looking for the latest bounce to begin losing momentum. Murphy believes they will be waiting for the price to get back to the $44.18 October low. Moving Below Triangle Pattern Support Finally, Murphy takes a look at the Innovator IBD ETF Leaders ETF ($LDRS). Now this fund can really give you clues regarding the future direction of the market since it holds positions in other ETFs that are leading the market. Check out its chart by StockCharts.com.
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The chart reveals that the ETF has just sunk below the triangle pattern’s support and is moving lower. This pattern indicates traders would set target prices somewhere around the lows in October, in the region of $22. As you’ve seen from the charts above, ETFs have become so popular that active traders can now track the performance of just about any niche. Murphy also observes that traders combine signs from different funds to be indicators for the performance of broader markets. These charts give an indication that, heading into 2019, the global markets could be moving lower. This kind of information helps you make more appropriate trading decisions.
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