The iShares MSCI Brazil ETF (EWZ) was created to track the results of an index composed of large and mid-sized Brazilian equities. From the technical perspective, we can see that the fund is still running below its short-term downside resistance line taken from the high of January 23rd. However, after finding support near the 36.58 hurdle, EWZ bounced sharply and could be en route to testing the above-discussed downside line. If it stays intact, we may get another round of selling, hence why we will remain cautiously bearish, at least for now.
If the price rises above the 39.50 zone, or the 40.34 mark, which is this week’s high, that may increase the ETF’s chances of drifting more to the upside. That said, as mentioned above, if the aforementioned downside line holds, this could invite the sellers back into the game. If so, the price might then drift south again, potentially overcoming the 40.34 obstacle and testing the 39.50 hurdle, which marks the highs of February 27th and March 2nd. If the selling continues, the next potential support zone to consider might be at 38.10, marked by the current low of this week.
Our oscillators, the RSI and the MACD, support the idea of a small recovery. The RSI, although slightly below 50, points higher. The MACD had bottomed in the end of February and now seems to be on a rapid move higher. It continues to point higher, while sitting above its trigger line, despite being below zero.
If the previously-discussed downside line breaks and the price climbs above the 42.09 area, marked by the low of February 21st, this could raise the EWZ’s chances of attracting more buying interest. The ETF could then travel to the 42.69 obstacle, a break of which might set the stage for a move to the 43.92 hurdle, which is the high of February 19th. Initially, the price may get a hold-up around there, or it may even correct slightly lower. That said, if EWZ remains above that downside line, we might see another uprise. If the ETF travels above the 43.92 zone, that’s when we will aim for another higher high and target the 44.66 level, marked by the high of February 12th.
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