The technical picture of the iShares MSCI Brazil Index (NYSEARCA: EWZ) on our 4-hour chart shows that the price is currently resting on a short-term upside support line drawn from the low of November 12th. Given that the index already had a good upmove from the beginning of November, there is a chance we could see some downside in the near term. However, as long as the above-mentioned upside line stays intact, the ETF may reverse back to the upside. Due to the lack of clarity in the next directional move, we will take neutral stance, at least for now.
Given that the price is currently sitting below the 21 EMA, it shows that there is slight weakness in the bull-bloc. If the above-discussed upside line eventually surrenders and the ETF falls below the 36.09 hurdle, marked by the low of December 14th, that could attract a few extra sellers into the field. EWZ would already be placed below the 50 EMA, which could be an additional sign of short-term weakness. The price may then slide to the area between the 35.30 and 35.07 levels, a break of which might set the stage for a push to the 33.20 zone. That zone is marked near the high of November 18th and near an intraday swing low of November 30th.
Our two oscillators are currently pointing slightly to the downside. The RSI is below 50 and the MACD is below its trigger line, but still above zero. The RSI is showing increasing downside price momentum, which supports the scenario mentioned above. However, the MACD is still in positive territory, which means that it would be best to remain neutral, at least for now, until we get a stronger signal for the next directional move.
If the aforementioned upside line continues to hold and the price rises back above the 37.13 barrier, marked by yesterday’s high, that might attract more buyers back into the game. If so, this could help the index move back to the current highest point of December, at 38.21. The upmove may get halted there for a bit, however, if the buying interest remains high, a break of that hurdle might open the door to some higher areas, as a forthcoming higher high would be confirmed. The next potential target could be at 39.09, marked by the highest point of March.
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