EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance?
If EWZ breaks support at (1), it should attract selling pressure. If it falls hard, the decline could well put the hurts to the iShares MSCI Emerging Markets ETF (EEM) and potentially ripple into the stock market in the states.
So far this morning, the bears are clearly winning this battle for Brazil, with the iShares MSCI Brazil Index ETF (NYSE:EWZ) falling a massive $6.69 (-17.09%) in premarket trading Thursday. Year-to-date, EWZ had declined -3.00% prior to today’s implied plunge, versus a 5.27% rise in the benchmark S&P 500 index during the same period.
EWZ currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 21 ETFs in the Latin America ETFs category, but will likely suffer a major downgrade if today’s early losses hold.
This article is brought to you courtesy of Kimble Charting Solutions.