“Brazilian analysts say the tariffs announced by U.S. President Donald Trump against Canada, Mexico and China could cause a currency-related inflation surge in Latin America’s largest economy, clouding the central bank’s outlook for interest rates.”
The article written in Reuters goes on to say that Brazil is facing inflationary pressures, which is why they raised their interest rates by 100-basis points.
The article then goes on to quote central bankers who say that tariffs could in turn, present “downside risk for price pressures in the event of a less inflationary scenario for emerging economies arising from shocks on international trade or global financial conditions.”
This is exactly what I have been trying to relay to traders and investors.
It could spark inflation, it might now.
It could spark disinflation and a global slowdown, but it might not.
PRICE rules.
Let’s looks at the charts of the iShares MSCI Brazil ETF (NYSEARCA: EWZ).
On the Daily chart, EWZ cleared the 50-DMA and entered a recovery or recuperation phase.
Last Friday’s price lines up perfectly with what you don’t see on the weekly chart, a favored exponential moving average.
So, we can safely say a close over Friday’s high will correspond with a significant weekly breakout.
EWZ is outperforming the benchmark on the Daily chart and on par with it on the weekly chart.
Real Motion or momentum looks better on the Daily chart than on the weekly chart.
But again, it is most likely safe to say that a breakout over Friday’s high will most likely improve momentum.
The monthly chart has its own narrative.
A favorite indicator on the monthly chart is the Bollinger Bands. You can see the one that is red.
I like it when the price sits below the BB and then rises above it.
Plus, EWZ is gaining relative strength after looking oversold.
While there is a lot of overhead resistance, this ETF is now on our radar.
I hope that like so many amazing setups I have shared with you (Gold, gold miners, corn, IBM, Stratasys, and so on) all of which went on to give us huge gains, you keep this ETF on your radar now too.
Price rules, fundamentals drool.
Twitter: @marketminute
The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.
