The global financial markets have been rocked in recent months thanks to increased volatility from U.S.-China trade talk. While the equity markets in most jurisdictions have struggled to move higher, one market that could be worth a closer look is Taiwan. As you’ll see in the charts below, the well-defined chart patterns are creating clear risk/reward setups that are pointing to higher prices for the remainder of 2019 and likely into 2020.
iShares MSCI Taiwan ETF (EWT)
Nation-specific exchange-traded funds (ETFs), such as the iShares MSCI Taiwan ETF (EWT), are often the go-to tool for active traders looking to gauge the entire market for a certain country. The price is trading inside a long-term ascending triangle pattern, as seen in the chart below, indicating that traders will be looking for a break beyond the resistance around $36. The recent bullish crossing between the moving average convergence divergence (MACD) and its signal line is a strong indicator that the bulls are in charge of the long-term momentum. Given the triangle’s configuration, active traders will most likely place their 12-month target prices at $42, which is equivalent to the entry point near $36 plus the pattern’s height.
Taiwan Semiconductor Manufacturing Company Limited (TSM)
Another triangle is building on the chart of Taiwan Semiconductor Manufacturing Company Limited, which is likely to attract the attention of aggressive traders (TSM).The pattern, as seen below, has been building since early summer and is currently reaching the breakout point at $44.52. Based on this pattern, technical traders would most likely place their buy-stop orders above the previously indicated resistance and set their short-term goals around $52.50, which is equal to the entry point plus the pattern’s height. In the event of a fundamental move, stop-loss orders will most likely be placed below the support of the 200-day moving average.
Hon Hai Precision Industry Company (HNHPF)
Hon Hai Precision Industry Firm is another Taiwanese electronic components company worth investigating further based on its chart pattern (HNHPF).The price has undergone a lot of volatility in 2019, as shown in the chart below, but the tight range between clear support and resistance suggests that the price is ready to suffer another rapid rise. In this instance, traders should look for an upward bias and for the price to climb over the combined resistance of the 200-day moving average and declining trendline. A closing over $4.88 will very certainly serve as a stimulus for a rapid run higher, and traders will almost certainly attempt to protect their holdings by putting stop-losses below $4.60 in the event of a fundamental change.
The Bottom Line
Most global financial markets have struggled to rise in recent months, but Taiwan seems to be an anomaly, which, based on the patterns outlined above, will certainly hold the interest of active traders for months to come.
Casey Murphy did not hold any of the assets listed at the time of writing.
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