Foreign markets are more accessible than ever with the use of exchange traded funds (ETFs). The funds allow you to participate in the price fluctuations and trends of foreign markets, while still using a U.S. exchange. These ETFs can provide diversification benefits as well as alternative trading opportunities. The S&P 500 SPDR (ARCA:SPY), which tracks the U.S. S&P 500 index, was up 0.71% over the last month, while the following four foreign market ETFs were all up more than 3%, with one up more than 9% over the same time frame. Therefore, it can to pay look at opportunities which are materializing in markets outside the U.S.

Brazil iShares (ARCA:EWZ) is up 9.85% over the last month and has formed a pennant-like chart pattern. If the price breaks above short-term resistance at $48, another move higher is likely, with the next target being $51, just below the $51.75 October high. Beyond that there is a still a lot of overhead resistance through to $58. Therefore the the long-term trend still remains down at this point. If the price drops below $45.25 it will have broken the consolidation to the downside and could reverse much of the prior gain. Stops are traditionally placed just outside the pattern, on the opposite of the breakout. Placing the stop just outside a recent swing high or low inside the pattern, following the breakout, is another alternative.

Brazil iShares (ARCA:EWZ) is up 9.85% over the last month and has formed a pennant-like chart pattern.

Wisdom Tree India Earnings Fund (ARCA:EPI) is up 3.32% over the last month, and has also formed a pennant-like pattern. The price is in a strong uptrend since September, therefore, pullbacks to support at $18 or $16.50 provide entry opportunities for longer-term traders. Shorter-term traders will be focused on the breakout of the current pattern. A rise above $19.25 should attract enough buying interest to push the the price to $20.25 to $20.50. A drop below $18.70 is likely to push the price down into trend support near $18. For longer-term trades stops are below $15.50, or $17.50 to keep potential losses smaller. If trading the pennant formation, a breakout higher is the preferred trade, with a stop below the formation.

Wisdom Tree India Earnings Fund (ARCA:EPI) is up 3.32% over the last month, and has also formed a pennant-like pattern.

Italy iShares (ARCA:EWI) is up 3.20% over the last month and has been advancing since August 2012. In 2014 the ETF has been moving higher within a trend channel. If the price drops below $17 a small double-top pattern will complete, and signals a deeper correction to $16. $16 to $15.50 is likely to be a strong support area based on the longer-term trend. Such a move presents an opportunity for longer-term traders to get in, with a stop below $14.50 and a target above $18. In the short-term, a pop back above $18 provides a target of $18.75.

Italy iShares (ARCA:EWI) is up 3.20% over the last month and has been advancing since August 2012. In 2014 the ETF has been moving higher within a trend channel.

United Kingdom iShares (ARCA:EWU) is up 3.59% over the last month and has been in a uptrend since 2009, with the latest leg starting in mid-2012. Since mid-2012 the ETF has been moving higher in a channel roughly $2 wide. Currently near the mid-point of the channel and moving higher, the expectation is for the price to target $21.70. A pullback to the $20.50 region presents a buying opportunity, assuming the price had made a higher high prior to the pullback. The ETF can be choppy and has seen periods of sustained sideways movement even throughout the uptrend. Therefore, the longer-term uptrend remains in tact as long as the price stays above $19.45.

United Kingdom iShares (ARCA:EWU) is up 3.59% over the last month and has been in a uptrend since 2009, with the latest leg starting in mid-2012.

The Bottom Line

These foreign market ETFs have been performing well recently, and present opportunities for both longer and shorter-term traders. Since the actual stock markets in these countries, like the U.K for example, operate at different times than the U.S. markets, price gaps can frequently occur in these ETFs between the open and the prior close. Therefore, keep position size in alignment with your trading account so a loss won't significantly impact your trading capital. Also, use stops to help limit risk, as well as indicate when the ETF is no longer acting in alignment with your expectations.

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