Brazil’s Big Comeback: EWZ Breaks Out
Dr. Duru | Aug 24, 2017 04:40AM ET
What a difference three months makes.
On May 18th, I wrote “
The iShares MSCI Brazil Capped ETF (EWZ) is up 22.4% since the bribery-triggered sell-off. Buyers have pushed EWZ through a downtrend in place since 2010.
This weekly view of iShares MSCI Brazil Capped ETF (EWZ) shows an approximate downtrending channel from 2010-2015 where the top line stayed in place as resistance until Wednesday's (Aug 23rd) breakout.
My clue should have come on June 26th convincing Brazil’s lower house of Congress to block a corruption trial , EWZ was already close to finishing a complete reversal of May’s gap down. Today’s breakout is now the continuation of the momentum that was in place before the bribery scandal broke.
My key lesson here is to stay closely attached to stories that have such a dramatic impact on trading, especially when I appear to have made the correct call on the ultimate resolution! Since I assumed EWZ would remain weakened and would offer at least one or two more buy-the-dip opportunities, I was far too slow in updating my technical assessment. The post-bribery high on a gap up and breakout above BOTH the 50 and 200-day moving averages (DMAs) on July 12th should have served as my last boarding call.
Full disclosure: no position
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