One of the most popular investment trends is buying into a group of economies known as the BRIC nations. In case you aren’t familiar, this acronym refers to the countries of Brazil, Russia, India, and China. Economists and investors both like to group these countries together because they are experiencing similar levels of economic development. BRIC countries are also widely regarded as the pinnacles of the emerging markets. In the article below we will take a look at the charts and try to determine if now is the time to buy into the group or if it would be better to focus investments in only select BRIC countries. (For more, see: Brazil, Russia, India and China Video).


Brazil has been the beneficiary of significant investment in recent years thanks to its dynamic economy and major events such as the 2016 Rio Olympics and the 2014 FIFA World Cup. Taking a look at the chart of the iShares MSCI Brazil Capped ETF (EWZ), you can see that its companies have been trading within an established uptrend since the 50-day moving average crossed above the 200-day moving average back in April 2016. However, the recent drop below the long-term support of its 200-day moving average on heavy volume is now viewed as a technical sell signal. It is interesting to note how the price failed to break back above the moving average on its pullback earlier this month. The failed move higher confirms that the 200-day moving average is now going to act as a strong level of resistance and will likely be the major barrier that will stand in the way of a continuation of the uptrend. (For more, see: Top 5 Brazil ETFs For 2017).


Every day there seems to be a new political news story about Russia. Often, it seems nearly impossible to view Russia as a viable investment because the nation is embroiled in controversy. However, from the view of an active trader, you can see on the chart of the VanEck Russia ETF (RSX) that the Russian financial market has benefited from a strong uptrend that started in April 2016 (like EWZ above). This chart is at an interesting inflection point because like the chart of EWZ above, it has broken below the support of its long-term 200-day moving average. Traditionally, this type of breakdown is an early indication of a trend reversal, and active traders will want to pay close attention to see if the bulls can reclaim the $20 mark in upcoming sessions. (For more, see: A Full Analysis of the RSX ETF).


There has been a lot of hype over the past several months that famous investor Jim Rogers regrets selling out of positions in India too soon. Taking a look at the chart of the PowerShares India Portfolio (PIN), you can see why this type of message makes its rounds. India has been trading within one of the strongest uptrends found anywhere in the world. Based on the chart, it doesn’t look as though this story should change anytime soon. Active traders will look to the recent crossover between the 50-day and 200-day moving averages as the beginning of a long-term uptrend. In this view, PIN is still in the early stages of a major move higher, and most will likely watch closely for an entry on any sort of pullback. Ideally, the bulls will want to buy in as close to the 200-day moving average as possible to maximize the risk/reward. (For more, see: 3 Emerging Market ETFs to Watch in 2017).


Last, but not least, active traders interested in gaining exposure to the BRIC group of economies will want to take a look at the chart of the iShares China Large-Cap ETF (FXI). As you can see below, the bulls have recently pushed the price of the ETF above its recent swing high. The close above the previous resistance marks a clear zone that buyers will be using to determine the placement of their orders. Stop-loss orders will likely be placed below either the 50-day or 200-day moving averages depending on risk tolerance. (For more, see: Investopedia Analysis: Daily FTSE China Bull 3X Shares).

The Bottom Line

Investing in BRIC economies is a popular strategy for international investors seeking growth. While there are funds targeted at this specific group, based on the charts discussed above, it appears as though active traders may want to focus their attention on India and China until prices of the Brazil and Russia funds move back above the newly-formed resistance levels. (For more, see: Emerging Markets Have Found Support And Are Headed Higher).

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