We’ve been pounding the table on the rotation taking place across Asian equity markets. Vietnam, Taiwan, Thailand, China—you name it.
The message is clear: the tide is turning and participation is broadening across Asia.
It’s no longer just Japan. Everything else is starting to work.
One of the key forces driving this rotation is a weak US Dollar. When the dollar stumbles, emerging market currencies catch a bid—and local equities tend to follow.
Here’s the latest in the mix, the Korean Won:
Like many Asian currencies, the Won spent over two years grinding lower in a steady downtrend. Earlier this year, it undercut key support. But instead of breaking down, it snapped back violently.
It’s a classic bear trap. A shakeout with the breakout. A little scoop before the score.
With the trap sprung, the Won is powering higher and testing a multi-year downtrend line that’s capped every rally since early 2022.
But context matters: the Dollar is breaking down versus other majors, and risk appetite for EM is improving across the board.
If there’s ever been a moment for the Won to break out, this is it.
And it's not just the currency that's on breakout watch:
South Korean equities are setting up, too. The MSCI Korea ETF $EWY is curling up toward a key polarity zone defined by the VWAPs anchored to the Covid lows and the all-time highs in late 2021.
A breakout here would confirm the move in the currency and suggest risk is back on in Korea.
How We’re Trading It:
For broad exposure, we’re watching MSCI South Korea ETF $EWY:
If EWY can reclaim 66 and hold above the VWAP cloud, we want to be long with a target of 77.50 and a longer-term objective of 96.
But for those looking to lean into relative strength, we’ve got two Korean names on breakout watch now.
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