After rebounding convincingly from the 30 level, the iShares Brazil ETF (EWZ) is overbought for the first time this year. Over the past 9+ months, the combination of a drop from overbought territory (on the RSI) and a short-term peak in the Rate of Change (ROC) has proven to be a favorable place to get short or tighten stops on existing long positions.
What would make me think this EWZ rally was different this time?
One potential x-factor would be EWZ’s ability to hold above the 50 day MA. That would show a change in character and could help the iShares Brazil ETF carve out a bottom. Time will tell.
EWZ iShares Brazil ETF Chart – RSI & ROC Overbought?
EWZ iShares Brazil ETF Chart – Above 50 Day Moving Average
Also, keep an eye on the Emerging Markets ETF (EEM) as it has been showing relative strength of late. Trade safe.
The author does not have a position in the mentioned securities. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.