Chart Spotlight: iShares MSCI Mexico Capped ETF (EWW)

iShares MSCI Mexico Capped ETF (EWW) is bouncing after hitting a seven-year low during Trump's news conference on Wednesday, as it nears oversold territory

Jan 12, 2017 at 3:39 PM
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The iShares MSCI Mexico Capped ETF (EWW) has struggled since the outcome of the U.S. presidential election, and yesterday dropped as much as 1.7% -- and hit its lowest level since September 2009 -- amid President-elect Donald Trump's press conference. Additionally, the Mexican peso hit a record low during the highly anticipated event, with Trump reiterating his intent to create "a very large border tax" for companies who move operations out of the U.S. Against this backdrop, here's a closer look at EWW's technical backdrop.

After hitting a seven-year low of $41.23 yesterday, EWW is on the mend. At last check, the exchange-traded fund (ETF) is up 0.4% at $42.01, just below the 61.8% Fibonacci retracement of its 2009-2013 surge. Widening the lens, EWW's 80-week moving average has acted as a rally-killer in recent years, with the ETF failing to notch a weekly close above this key trendline since 2014.

170112EWW 4

 

What's more, last week's rally attempt was quickly contained by EWW's 40-day moving average, which the shares have been staring up at since EWW's post-election drop. In fact, Nov. 9 was the ETF's worst day since 2008, with the shares plummeting 8.5% after Donald Trump's election victory. Currently, EWW has dropped 20% from its Nov. 8 close.

As such, EWW is nearing "oversold" territory, with a 14-day Relative Strength Index (RSI) of 32, indicating today's short-term bounce may have been in the cards. In addition, previous RSI readings around 30 have predicted short-term rallies for the iShares MSCI Mexico Capped ETF (EWW) over the last several years.

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