Wednesday, September 23, 2015

Brazil turnaround?....Under conditions the unthinkable can happen

Currently Brazil (EWZ) is in a well established downtrend since a year ago(-57% since last Sept).

Yesterday EWZ closed(21.90) just below the critical level of 22 forming a gap.Today is going to be a very interesting day regarding the price action of EWZ.
2 possible scenarios:
A) EWZ closes well below 22.That will probably mean that the gap was actually a continuation gap and will lead EWZ towards 14.
B)EWZ closes above 22.In that case a possible inverted H&S formation is on the cards.In that case we need to see a fast move with relatively increasing volume(PVO already is increasing and is ready to cross zero level).This upmove needs to break 23.8 level and close above this price level.Then a correction towards around 23.3 will complete the pattern of an inverted H&S.
 However wait until almost today's close.Don't catch the falling knife...Be ready to catch the handle.