The technical picture on our daily chart of iShare MSCI Brazil ETF (EWZ) shows that, from around mid-January, the fund has been declining, while trading below a short-term tentative downside resistance line taken from the high of January 14th. If the price continues to move below that line, there is a possibility to some further declines. That said, this move lower might still be seen as a correction, as EWZ remains above a medium-term tentative upside line, drawn from the low of May 14th.
If the price falls below January’s low, at 34.03, that could attract a few more sellers into game, potentially clearing the way to some lower areas, as such a move would confirm a forthcoming lower low. We will then aim for the 33.07 obstacle, or even for the 32.07 hurdle, marked by the low of November 23rd. The ETF might stall there for a bit, but if there are still no new buyers around that price, it may continue drifting lower, possibly targeting the 30.47 level. That level marks the low of November 12th.
The RSI is currently below 50 and pointing lower. The MACD, although it points slightly higher, remains below zero, while sitting on its trigger line. The combination of the two indicators still shows negative price momentum, but a drop below the 34.03 hurdle would still be needed, in order to have some reassurance in the possibility of seeing further declines.
Alternatively, if the price breaks the aforementioned downside line and then climbs above the 36.42 barrier, marked by the current high of this week, that might invite more buyers into the game. EWZ could rise to the highest point of January, at 38.75, a break of which might set the stage for a push towards the 40.34 level. That level is marked by the highest point of March 2020.
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