Playing the Momentum Building in iShares MSCI Brazil

Published on Wednesday, 15 June 2011 08:42 Written by Christopher Lynn

New York, June 15th (TradersHuddle.com) - Shares of iShares MSCI Brazil Index Fund (NYSE:EWZ) closed the trading session at $72.68 placing the price action in a very tight range, given that calculated support is set at $71.69 and the calculated resistance based on an algorithm of peaks and troughs is set at $75.34

iShares MSCI Brazil Index Fund (NYSE:EWZ) is an ETF that corresponds to the price and yield performance, before fees and expenses, of equities traded publicly on the Brazilian market, as measured by the MSCI Brazil Index. The underlying index attempts to gauge the performance of the Brazilian equities market by looking at 85% of the public market cap.

iShares MSCI Brazil's stock price action indicates that both sellers and buyers are materializing very close to each other, which is indicative to a momentum building area, as the stock can resolve by breaking out of the tight range that developed.

Traders wanting to establish a position should place close attention to iShares MSCI Brazil's price action, as any movement outside its predefined range of $71.69 and $75.34 could grab the attention of momentum buyers, looking for a big movement in the price of the stock. Traders need to be aware that tight range resolution works both ways, hence, a move below support at $71.69 could spark above average selling. A tiered approach can be a good way to approach starting a position in iShares MSCI Brazil's, by establishing a starter position while the stock is in the tight range, and then adding to the position as it breaks and closes above resistance.