Since its July 15 low, the iShares Brazil ETF (EWZ) was up 2.5% through yesterday's close whereas the SPY was up 6.7%. In addition, the pattern carved out by the EWZ has taken the shape of a bearish coil, which warns me to expect another bout of weakness. The fact that the coil has developed under both the 200 DMA and below the one-year support line is an ominous sign indeed, and suggests that the EWZ is heading for 75.00-74.00 next -- likely on the way to 71.00-70.00. Why? Brazil is heavily associated with the global commodity complex. Easy come, easy go, right?



Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.