Is Singapore Ready to Breakout?

As an adjunct to last week’s post on the emerging markets breakout my screens highlight a number of foreign regional markets that have either already broken out or on the threshold including the topic of this post, Singapore. Like EEM, the emerging market equity proxy, EWS Singapore’s stock market index ETF has formed a an inverse head and shoulders reversal pattern signaling the bottom of this particular downtrend is potentially in. You can see the right shoulder formed with positive divergence on the RSI momentum indicator and has formed a higher low and higher high. Price closing above the neckline will validate the uptrend by making a second higher high. Further upside could be expect on a break above the pattern’s neckline which has yet to occur and will not be valid until it confirms. A minor but important difference in the EWS chart is the pattern has a preferred horizontal neckline versus the slanted one seen on EEM.

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Price currently sits above the 200 day moving average which has just recently begun to point higher. Like EEM, the upside potential if this pattern were to play out is beyond 20% testing the 2014 and 2015 double top highs of $13.2. I think this setup is very attractive but have learned buying in advance of a patterns confirmation, like what exists here, is not conducive to portfolio out-performance. As such, I sit in cash waiting patiently for EWS to confirm the pattern