EM within massive 20+ yr wedge.....unlikely to break yet.
Emerging markets have been trading inside a massive wedge for the last 20+yrs and currently testing upper trendline....however technicals look very overbought and do not support a break yet. A move to the lower trendline in the coming months/yrs looks likely.
Comment:
Right on cue. EM seem to be turning lower on the upper bound trendline to remain within its massive 20+yr wedge. Overbought conditions call for a further decline but remains to be seen if a test of the lower bound trendline is in the cards in the months ahead.
Comment:
EM continues to fail to breakout of the wedge. overbought conditions have not cleared opening further downside in the months ahead.
Comment:
As indicated in our last update, EM mkts failed to breakout of the 20+yr wedge and its turning lower. Whether it goes all the way to the bottom of the range or just correcting partially remains to be seen. My impression is that EM are coiling in order to break to the upside in what will be a multiyear rally after years of underperformance to DM.
Comment:
EM continues to move lower after the failure to break out of its 20yr wedge. There is a a lot of value long term as I do think eventually we break higher, but as we suggested last May, there is still downside potential to the bottom of the wedge.
