The technical picture of the iShares MSCI Brazil ETF (EWZ) on our 4-hour chart shows that from the end of June, the index is forming lower highs and is trading below a short-term downside resistance line taken from the high of June 25th. The ETF is now seen pushing a bit higher, however, if the above-mentioned downside line remains intact, further declines could be possible. Hence our bearish approach for now.
As mentioned above, even if the ETF pushes a bit higher but struggles to overcome the previously discussed downside line, the bears could take advantage of the higher price and send it down again. If so, EWZ could fall back to yesterday’s low, at 38.00, a break of which might clear the path towards lower areas, as a forthcoming lower low would be confirmed. The index may travel to the 37.05 obstacle, or even to the 36.55 level, marked by the low of May 13th.
The RSI and the MACD are both pointing slightly higher, at the time of writing. However, the RSI remains below 50 and the MACD continues to sit below zero and its trigger line. Both indicators show negative price momentum, which may come in line with the scenario mentioned above.
Alternatively, if the aforementioned downside line breaks and the price rises above the 39.81 zone, marked by the lowest point of June, that could attract more buyers into the arena, possibly setting the stage for a move to some higher areas. EWZ may then climb to the 40.39 obstacle, or to the 41.33 barrier, marked by high of June 28th, where the index might stall for a bit. That said, if the buying continues, the ETF could move to the 42.04 level, marked by the highest point of June.
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