After a four-day shakeout below the 50-day moving average, iShares MSCI Japan Index ($EWJ) is now back above that pivotal intermediate-term indicator of trend. The ETF is also now trading above its 20-day exponential moving average as well. The reclamation of the 50-day moving average is shown on the daily chart below:



With $EWJ, we look for the price action to hold above $11 from here on out. On the daily chart above, note that the 20-day EMA was below the 50-day MA as the price action pulled back during May and June. However, the 20-day EMA is now back above the 50-day MA, and there are now two higher lows within the base on 6/24 and 7/29. This indicates momentum is shifting back in favor of the bulls.

Last week's recovery in $EWJ produced an uptick in the 10-week moving average line, which is now starting to trend higher for the first time in a few months. The 40-week MA remains in a strong uptrend as well:



Looking at longer-term weekly chart patterns, in addition to daily charts, is a good way to make sure you always keep your eye on the "big picture" of the dominant trend (see this video to learn how we determine the strength of a market trend).

We have been long $EWJ since August 1, and the ETF looks well positioned for further gains. We will keep subscribers informed of any changes to our stop or target prices.

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.