This is your best way to play the overseas markets: Technician

Some of the biggest gains this year have been made outside of the U.S., and the charts are signaling that the trend will continue.

The emerging market ETF (EEM) is up 18 percent year to date, a much bigger surge than the 8 percent the S&P 500 has recorded this year, and Ari Wald of Oppenheimer says it hasn’t topped out yet — and it could be your best way to play overseas markets.

Looking specifically at the EEM relative to the EFA, the ETF that tracks developed markets excluding the U.S. and Canada, Wald noted that the EEM has begun to climb higher relative to the EFA.

“EEM is in this narrowing range beginning to break higher versus EFA,” Wald said Monday on CNBC’s “Power Lunch.” “Within this larger turnaround, we think EEM is the play for overseas exposure.”

Additionally, Wald believes that another positive aspect for EEM is that he doesn’t see the dollar making the “significant upturn” needed to disrupt emerging markets.

This is in contrast to a note released by Brown Brothers Harriman over the weekend, which expressed concern about emerging markets in light of a strengthening dollar and more Federal Reserve tightening on the way.

However, Erin Gibbs, equity chief investment officer at S&P Global, does echo the sentiments expressed by the note on a day when the dollar hit a two-month high against the yen.

“Ever since we really saw a pop in the dollar around mid-May, [EEM] has been in a flat trading range and it really hasn’t been moving,” she said on “Power Lunch.” “I think as long as we’re having concerns about raising rates in September or potentially the dollar rising, this ETF could again sort of stay in that stable trading range and really underperform for the next three to maybe four months.”

Fair to Gibbs’ point, EEM has been trading in a range since mid-May, failing to reach new highs despite what has been an otherwise stellar 2017 for the ETF. But Gibbs also emphasizes that that isn’t to say the current trends in the dollar will continue.

“Once the rising rates and dollar concerns go away, particularly in the fourth quarter, I think that’s when you may see an opportunity, because we do see potential higher growth in the Asia-Pacific region,” Gibbs explained.

The EEM is currently sitting near two-year highs, despite its rally stalling in the last two months or so.