Brazil currently has the top performing stock market of any country in the world in 2016. After starting the year with a dip lower, the iShares MSCI Brazil ETF is now up 50% from its low! Below is a two-year chart of EWZ. The most recent move higher broke the ETF above a 15-month downtrend that had been in place, and it now has another support level that formed from its late 2015 highs. Things appear to be looking up for Brazilian stocks.
Before getting gung-ho bullish on EWZ, however, we’ve seen this pattern before. Below is a five-year chart of EWZ that shows an even longer downtrend channel. Back in mid-2014, the ETF broke above the top of a multi-year downtrend channel and moved above key resistance before completely breaking down once again by the end of that year!