The iShares MSCI Germany ETF (EWG) will make a lot of people a lot of money in the next 12 weeks... but not everyone.

This chart shows EWG trading at a critical support level. A rule of thumb for trading is that major support lines normally hold while minor support levels usually break. What that means for EWG is uncertainty: a jump back to recent highs or a fall off a cliff.

I'm biased towards a fall off the cliff. Just look at momentum getting ready to turn negative like Karl Rove in a presidential campaign.

Not to mention that manufacturing numbers show a fall of 2.4% when economists expected a rise of 0.3%.

So here's how to trade it: A failure here means a quick tumble to $22 (from a current price of $28.50) with an ultimate hard landing all they way down at $8, however unlikely that seems.

A bounce here should be played a bit more tentatively, since upside is more limited.

Sara Nunnally
Editor, Taipan Trader

 

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