Looking at the technical picture of the iShares MSCI Brazil Index (NYSEARCA: EWZ) on our 4-hour chart, we can see that on Friday it managed to overcome its short-term tentative downside resistance line drawn from the high of July 29th. Such a move might be seen as a bullish indication, potentially leading to a change in the short-term trend. Also, to support the bullish case, the price is now trading above all of its EMAs. That said, the index is currently finding resistance near the 30.88 barrier, marked by the high of August 18th. Although everything is still pointing towards a further upside, in order to get a bit more comfortable with higher areas, we would like to see a break of that barrier first. Hence our somewhat-bullish approach for now.
Eventually, if we do see a push above the aforementioned 30.88 area, that would confirm a forthcoming higher high, possibly inviting more buyers into the game and clearing the path towards the 31.62 and 31.74 levels, marked by the highs of August 13th and 10th. The price might stall there for a bit, or even correct back down. That said, if the index remains above the 30.88 hurdle, the bulls may take advantage of the lower price and lift it up again. If this time the 31.74 obstacle fails to halt the acceleration and breaks, the next possible resistance level could be at 32.41, marked by the highest point of August.
The RSI, despite being flat at the moment, remains above 50, which indicates that the upside price momentum had slowed down a bit. The MACD is pointing higher and is running above its trigger line. However, the indicator remains fractionally below zero. Given all of the above, we will wait for a confirmation break above the 30.88 barrier, before aiming further north.
Alternatively, if EWZ suddenly falls below all of its EMAs and then also drops below the 29.82 hurdle, that may spook the buyers from the arena. More sellers could join, possibly taking the index to the 29.10 zone, or even the 28.76 level. That level marks the lowest point of August.
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