Looking at the technical picture of the iShares MSCI Brazil Index (NYSEARCA: EWZ) on our 4-hour chart, we can see that the price is currently stuck between two short-term trendlines: an upside one drawn from the low of October 2nd and a downside one taken from the high of July 29th. As long as the index remains between the lines, we will stay neutral.
If EWZ gets pushed through the aforementioned downside line and then travels above yesterday’s high, at 29.90, that would confirm a forthcoming higher high, potentially inviting a few extra buyers into the arena. That’s when the index may rise to the 30.40 obstacle, a break of which could lead the price to the 31.42, marked near the highs of September 10th and 16th. EWZ might stall there for a bit, or even correct back down slightly. If the price is able to stay somewhere above the 30.00 area, the buyers may take charge again. If so, they could lift the index back to the 31.42 zone, a break of which might open the way for a test of the 31.91 barrier, marked by the highest point of September.
The RSI and the MACD seem to be showing positive price momentum on our 4-hour chart. The RSI is above 50 and the MACD is above zero and its trigger line. However, the two oscillators are pointing slightly to the downside, at the time of writing. This is why we would prefer to wait for a violation of one of the above-discussed lines first, before examining the next directional move.
If the index drops below the previously-mentioned upside line and then below the 28.80 hurdle, marked by the current lowest point of this week, that may spook potential new buyers from entering any time soon, as such a move could increase the chances of seeing a further decline. EWZ might drift to the 28.43 obstacle, a break of which may open the way to the 27.64 hurdle, marked by the low of October 7th. If the slide continues, the next potential support target could be at 27.09, which is the lowest point of September.
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