Although the iShares MSCI Germany Index ETF (EWG) has experienced a 5-6% decline during the past week, my pattern analysis argues that all of the action off of the Nov 4 high at 24.92 represents a sideways, bullish digestion period. When complete this should resolve in another thrust to the upside that projects to 27.00-plus in a resumption of the larger bull leg off the May 2010 low at 17.97.

The current downleg should end in the 23.00-22.80 area prior to a climb that tests key near-term resistance at 24.40/50. If (when) hurdled, this will point the EWG towards new post March 2009 recovery highs.

By Mike Paulenoff

Mike Paulenoff is author of MPTrader.com (www.mptrader.com), a real-time diary of his technical analysis and trading alerts on ETFs covering metals, energy, equity indices, currencies, Treasuries, and specific industries and international regions.

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