Good Setup Developing in iShares MSCI EAFE

Published on Monday, 02 July 2012 08:28 Written by TradersHuddle Wire

New York, July 2nd (TradersHuddle.com) - iShares MSCI EAFE Index Fund (NYSE:EFA) closed the trading day at $49.96, near its 50 day and 200 day moving averages set at $49.91 and $51.22 respectively. iShares MSCI EAFE's price action placed the stock above the 50 day moving average but below its 200 day moving average, providing a nice trading setup with clear reference points.

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 seems to be setting up for a tight range between the 50 day moving average as support and the 200 day moving average serving as resistance.

A tiered approach appears to be the best way to maximize possible movements in the stock, as traders could establish a small position in iShares MSCI EAFE and wait for the stock to break out above the 200 day moving average at $51.22. Then they could add to the position as momentum builds with the breakout. On the other hand, if support being referenced at the 50 day moving average set at $49.91 breaks, it could signal further downside for iShares MSCI EAFE in the horizon.