The Brazilian ETF, Brazil iShares (EWZ) hit a new 52 week low yesterday, briefly touching the 32.64 level before rebounding slightly to close above 33. While numerous reasons have been given for the continued weakness in the Brazilian ETF – the Petrobras corruption scandal, rising interest rates, flat GDP, water rationing – the result has been an especially ugly chart for yesterday’s emerging markets star.
The six month Heiken-Ashi chart tells the story of an ETF that continues to cascade lower, rebounding occasionally only to be rejected by the 50 day moving average. Despite the new lows yesterday, EWZ is not yet oversold and the rate of change is still well above earlier levels that marked near-term lows.
Brazil iShares (EWZ) Chart
While it might be tempting to call a bottom and play for a rebound up to the 36 level, for those of us that trade with the trend, signs point to further headwinds for the Brazilian ETF.
In full disclosure, my firm BetterBeta Trading has recommended a short position in EWZ to their subscribers. But whichever side of the trade you are on, remember to always use a stop and follow a plan. Thanks for reading.
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.
