Brazilian stocks and the iShares MSCI Brazil Capped ETF (NYSEArca: EWZ) are looking for things they have seen precious little of over the past several months: Stability and upside momentum.

Following newsthat some professional investors have been dumping shares of Petrobras (NYSE: PBR), one of EWZ’s largest holdings, the ETF fell nearly 1.2% Thursday, volume was less than half the trailing three-month average and the fund is still up 3% over the past week.

While chronically problematic Petrobras still figures prominently in EWZ’s fortunes (two Petrobras securities combine for almost 7% of EWZ’s weight, making the company the ETF’s second-largest holding), there are nascent technical signs that the largest Brazil ETF could be starting to turn for the better. [Petrobras Pushes Brazil ETF Lower]

“Recently there has been an interesting setup created in the latest price action for EWZ. Earlier this month price tested the December low and bounced higher. At this test of the prior low the Relative Strength Index (RSI) put in a higher low. This bullish divergence is a good sign for Brazil bulls. What I’ll be looking for next is to break out of the resistance near 58 on the RSI as a positive sign that momentum is strengthening,” according to Andrew Thrasher, investment analyst with Financial Enhancement Group.

Among the major Latin America single-country ETFs, only the Global X FTSE Colombia 20 ETF (NYSEArca: GXG) and the iShares MSCI All Peru Capped ETF (NYSEArca: EPU) have performed worse than EWZ this year. Only the iShares MSCI Mexico Capped ETF (NYSEArca: EWW) has lost more assets than the roughly $276 million shed by EWZ among Latin America country ETFs. [Brazil ETFs Looking for Bottoms]

Still, EWZ is flirting with some important technical areas. For example, the ETF resides just 1.4% below its 20-day moving average and less than 2.3% below its 200-day line.

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