The iShares MSCI Brazil ETF (EWZ) has demonstrated a constructive technical setup, indicating that its recent corrective phase may be concluding. Following a significant correction in the second quarter, EWZ has stabilized, leading to an oversold upturn in weekly stochastics and improved momentum, which suggests that a low has been established.
The ETF remains in a cyclical bull trend, with support near $34 and resistance around $42, the latter being the 2021 peak. Recent trading activity, including a gap higher that reclaimed the 200-day moving average, further supports the notion that the correction in Brazilian equities has matured.
Additionally, major Brazilian companies like Petroleo Brasileiro S.A. (PBR) and Itau Unibanco Holding S.A. (ITUB) are also showing signs of recovery, with PBR poised for a breakout above its 50-day moving average and ITUB recovering after a brief dip below its 200-day moving average.
The overall bullish outlook for Brazil's market is bolstered by a rebound in crude oil prices and improving conditions across various sectors, making it an attractive opportunity for investors