Looking at the technical picture of iShares MSCI Brazil Index (NYSEARCA: EWZ) on our daily chart, we can see that the ETF overcame the highest point of June, at 33.33, but got held by the 200-day EMA. Yesterday, the index corrected lower, wiping out the gains of the previous two trading sessions. That said, the price is still in the positive zone for the week and continues to run above a short-term tentative upside support line taken from the low of May 14th. Even if the index drifts a bit lower during today’s session, as long as it remains above that upside line, the outlook could remain somewhat positive. However, to get a bit more comfortable with the upside, another push above June’s high and a daily close above 200-day EMA would be need.
If, eventually, we do see a push above June’s high, at 33.33, and a daily close above the 200-day EMA, more buyers could see it as a good opportunity to step in and drive the price further north. EWZ might then travel to the 34.61 obstacle, a break of which may open the door for some larger extensions to the upside. The next possible resistance area to consider might be at 36.58, marked by the lowest point of February.
Our oscillators, the RSI and the MACD, seem to be in support of the above-mentioned idea to wait for a break above the 33.33 barrier first, before examining higher areas. Although the RSI is above 50, it currently points slightly lower. The MACD is currently more on the flat side, but remains above zero and its trigger line, which supports the bullish case overall.
On the other hand, if the aforementioned upside line fails to provide support and breaks, that could make the bulls worry, especially if the price also falls below the 31.20 hurdle, marked near the highs of June 23rd, July 9th and 15th. If such a move occurs, the index may start sliding towards the 29.61 obstacle, or even the 28.08 hurdle, which is the low of June 26th. If the selling doesn’t stop there, the next potential support area might be at 26.20, marked by the low of May 29th.
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