Germany – Quick Note

An Overlooked Bet

Recently, MSCI Germany ($EWG) broke out from an inverted head and shoulders pattern. The important part is the breakout happened with a gap up candle, a very powerful signal displaying significant underlying strength. While a retest of the neckline, around $30 is on the table, the upside pattern target lies at around $35.25 i.e., more than a 12% move from current levels.

This inverse head and shoulders target is also confluent with another resistance level that lies around $35.58. It’s important to note, a break back below the inverse head and shoulders pattern would mean a retest of the uptrend line (another buying opportunity). But based on the bigger picture, we’re bullish on $EWG as shown in the upcoming sections of this article.

Intermarket Analysis

$EWG typically has a positive correlation with the EUR/USD currency pair. However, lately there’s been a divergence. This is an important chart to keep an eye out on because confirmation from a currency market (for intermarket analysis) is of significant essence.

In the next section for our paid members, we’ll outlay 3 key points: $EWG seasonality so we can make the right bet when the “season” is right, $EWG relative to DAX , and DAX relative to the S&P 500, what’s a better bet?

We’re also about to release our Q2 2024 Cycles Forecast for multiple different asset classes and equity names. The introductory article for the quarterly Cycles Forecast can be found here, and we’ll have another detailed article for the release coming out soon. Please note that our Founding Members have now been emailed these Cycles Forecasts (the full deck covering every name!). If you would like your copy earlier, please consider upgrading to a Founding Member status on our Substack.