Conclusion, Investment Implications, Strategy
The iShares MSCI Poland ETF (EPOL) appears to be resuming its July 2019 decline following 5 months of sideways investor decision. A sustained decline below the 20.46 area would help confirm this and target an additional 11% decline to 18.00. This is an Asbury Momentum idea.
Analysis and Rationale
The iShares MSCI Poland ETF (EPOL) seeks to track the investment results of the MSCI Poland IMI 25/50 Index. The fund generally will invest at least 90% of its assets in the component securities of the index and in investments that have economic characteristics that are substantially identical to the component securities of the index and may invest up to 10% of its assets in certain futures, options and swap contracts, cash and cash equivalents. The index is a free float-adjusted market capitalization-weighted index designed to primarily measure the performance of equity securities listed on stock exchanges in Poland. The fund is non-diversified.
Chart 1 below plots EPOL daily since Jun 2019 and shows that price is currently breaking down lower from 5 months of sideways price activity, indicative of investor indecision, following the late August bottom. This emerging breakdown suggests the larger July decline is resuming. A sustained move below the lower boundary of the investor indecision area at 20.46 would help confirm this and target an additional 11% decline to 18.00.
Chart 1
Table 1 below shows that, considering the aforementioned downside target and a protective stop placed above the 20.68 area, a short entry price of 20.30 would provide a 1:6.1 risk/reward ratio (risking $1.00 to make $6.10) with an initial risk of 1.9%.
Table 1
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