Japan ETF’s Chart Shows Promise

The iShares MSCI Japan (NYSEArca: EWJ) is already up almost 21% year-to-date, but the ETF’s surge on the back of a weak yen may not be over.

At least one technical analyst sees opportunity remaining with the largest Japan ETF. “Currently, EWJ is in pullback mode and trading just above support of its rising 20-day exponential moving average,” wrote Deron Wagner of Morpheus Trading Group.

“Waiting to buy EWJ on a breakout to new highs is tough to pull off, as the price is basically trading a full day behind by the time the US market opens. Because of this, we prefer to buy EWJ on weakness. With the 20 and 50-day moving averages just below, this may be the right time do so,” said Wagner.

EWJ’s potential for another near-term ascent is buoyed by some of the better fundamentals in the developing world. Last month, Prime Minister Shinzo Abe said at an investor conference held by Bank of America Merrill Lynch said is his country is a “buy” now. [Abe Calls Japan a Buy]

Japanese equities have strengthened on Abe’s push for economic changes, or so-called “Abenomics,” which include aggressive quantitative easing, infrastructure spending and rapid devaluation of the yen. The International Olympic Committee also recently awarded Tokyo the 2020 Summer Olympics.