Since May, emerging markets ETF iShares MSCI Frontier 100 ETF ($FM) has been tightening up on the weekly chart, with each selloff from swing high to low retracing less than the last.

When we examine a stock or ETF's basing action, we always look for a tightening of the price action and a dry up in volume. If a pattern has these two things going for it then it's in pretty good shape.

On the weekly chart below, note the dry up in volume during the past three weeks in $FM vs. the 10-week volume average:



After breaking out from a tight range above the 20-day EMA, the price action pulled back to the prior breakout level on declining volume last week.

This is a key support level that should hold, especially with the rising 20-day EMA just below:



Based on the analysis of the two charts above, we are now stalking $FM for potential buy entry going into today's session.

Paid subscribers of our nightly stock and ETF trading newsletter should note our exact and preset entry, stop, and target prices for this trade setup in the "Watchlist" section of today's report.

Just a heads up, holdings in Kuwait 26%, Qatar 18%, United Arab Emirates 15%, and Nigeria 12%, account for more than two-thirds of $FM's overall portfolio exposure.

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.