Morpheus Trading: Since May, emerging markets ETF iShares MSCI Frontier 100 ETF (NYSEARCA:FM) has been tightening up on the weekly chart, with each selloff from swing high to low retracing less than the last.
When we examine a stock or ETF’s basing action, we always look for a tightening of the price action and a dry up in volume. If a pattern has these two things going for it then it’s in pretty good shape.
On the weekly chart below, note the dry up in volume during the past three weeks in $FM vs. the 10-week volume average:
After breaking out from a tight range above the 20-day EMA, the price action pulled back to the prior breakout level on declining volume last week.