After breaking out from a base around $18, and stalling just above $20, Guggenheim Shipping ETF ($SEA) pulled back to find support at the rising 10-week moving average.

Last week's price action followed through on the previous week's bullish reversal candle, but stopped just shy of breaking out to new highs.

Whether $SEA breaks out this week or in a few weeks from now, there is very little overhead above $20.Once it clears that level, it could potentially run to the next major resistance level (around $25):



We remain long iShares MSCI Japan ETF ($EWJ) from our pullback entry in early October (around $10.70).

Although $EWJ has failed to breakout, the price action has continued to tighten up within the base over the past few weeks, especially above the 50-day moving average.

On the chart below, note the higher "swing lows" during the base as well.

The combination of higher swing lows and tight price action is what we typically look for in basing patterns.

We also like that volume has been trying up, which is a bullish sing as traders take $EWJ off their radar because of the choppy action.

A breakout above the four-week high should quickly lead to new 52-week highs:

 

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.