How to Play the Building Momentum in iShares MSCI EAFE

Published on Tuesday, 19 June 2012 08:28 Written by TradersHuddle Wire

New York, June 19th (TradersHuddle.com) - Shares of iShares MSCI EAFE Index Fund (NYSE:EFA) closed the trading session at $49.36 with its price action in a very tight range, given that calculated support is set at $47.68 and the calculated resistance is set at $49.56.

iShares MSCI EAFE Index Fund (NYSE:EFA) is an ETF with the investment objective to seek investment results that correspond to the price and yield performance of equities traded in the Australasia, European and Far Eastern markets, as measured by the MSCI EAFE Index. The underlying index measures international equity performance. It includes 21 MSCI country indices, representing the developed markets outside of North America, including Europe, Australasia and the Far East.

iShares MSCI EAFE's stock price action indicates that both sellers and buyers are materializing very close to each other. This signals an area where momentum is building, since the stock can resolve by breaking out of the developing tight range.

Traders wanting to establish a position should pay close attention to iShares MSCI EAFE's price action, as any movement outside its predefined range of $47.68 and $49.56 could grasp the attention of momentum buyers that look for a big movement in the price of the stock. Traders need to be aware that tight range resolution works both ways, hence, a move below support could spark above the average selling. A tiered approach could be the best way to start a position; enter into it while the stock is in the tight range, and then add to this position as it breaks and closes above resistance.