The Tema ETF Trust Tema American Reshoring ETF RSHO was consolidating Monday after surging 2.34% on Friday. The move higher came after President Joe Biden proposed fresh regulations aimed at boosting the production of electric vehicle batteries and their components in the United States.
The new rules may motivate U.S.-based EV automakers to change their supply chains and source all materials, such as the rare earth minerals used in EV batteries, from American producers to take advantage of the Biden administration's federal tax credits, the New York Times wrote.
China’s EV manufacturers are already struggling in the U.S. market due to the 25% tariff on Chinese auto imports, which former President Donald Trump enacted, and Biden reinforced.
Investors seeking an opportunity to benefit from the government’s present and future reshoring initiatives may choose to take a position in RSHO, which offers protection against trade wars, geopolitics and supply chain failures, holding companies that through their business practices and initiatives are set to emerge as victors in the reshoring wave.
The fund's industry breakdown is heavily weighted in the industrial sector, which makes up 68.39% of its holdings, while companies focused on non-energy materials make up about 23.32% of the ETF's holdings.
Since RSHO began trading on May 11, the ETF has soared 20%, outpacing the S&P 500, which is up about 10% over the same period.
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The RSHO Chart: RSHO printed a big bullish kicker candlestick on Friday and on Monday, the ETF was consolidating slightly lower, forming an inside bar pattern. The inside bar leans bullish because RSHO was trading higher before forming the pattern and traders can watch for the ETF to break up from Friday’s mother bar on higher-than-average volume to indicate the formation has been recognized.
- RSHO is trading in a confirmed uptrend, making a consistent series of higher highs and higher lows. The most recent higher high was formed on Nov. 24 at $29.15 and the most recent higher low was printed at the $28.78 mark on Nov. 28.
- Because RSHO has surged significantly higher over the last few weeks, the ETF’s relative strength index (RSI) reached 70% on Friday before dropping slightly on Monday. When a stock’s or ETF’s RSI reaches that level or higher, it becomes overbought, which can be a sell signal for short-term technical traders.
- If RSHO breaks up from Friday’s mother bar later this week and gains momentum, the ETF will reach a new all-time high, which means there isn’t any resistance above in terms of price history. Bearish traders want to see the ETF reject the previous all-time high of $30 and form a bearish double-top pattern at that level, which could indicate the uptrend will end.
- RSHO has resistance above at $29.63 and at the previous all-time high and support below at $28.90 and at $28.15.
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