Recently, iShares Emerging Markets Index ($EEM) broke out above a long-term downtrend line that began with its April 2011 high. Overall, we have been noticing the rotation of institutional funds into international ETFs, especially with regard to select emerging markets. The breakout above the downtrend line of EEM is shown on the weekly chart below:



Drilling down to the shorter-term daily chart, notice that EEM is also forming a "bull flag" pattern that should resolve itself to the upside in the coming days. With a tight volatility contraction over the past two days, a move above the two-day high could be considered buyable. Subscribers should note our exact entry and stop prices for this trade set up in the ETF watchlist section of today's newsletter. Here's the daily chart pattern:



Most of the agricultural commodity ETFs bounced higher yesterday, forming potential buy entry points into these ETFs with a positive reward to risk ratio. Of the handful of agriculture ETFs, the one that has shown the most relative strength and the best chart pattern lately is Elements International Agriculture ETF ($RJA). As you can see on the daily chart below, RJA formed a bullish "hammer" candlestick pattern yesterday, as it moved back above its 50-day moving average. With the recent "undercut" of its 50-day MA, this presents us with a low-risk entry point and a clearly defined stop below the "swing low" of September 18. As such, we are monitoring RJA for potential swing trade buy entry in today's session, if it moves above yesterday's high:

 

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and MorpheusTrading.com, a trader education firm.