Tuesday, July 9, 2013

PBR Petrobras Weekly and Daily Charts Downward-Sloping Channel Oversold Falling Wedges Positive Divergence

PBR is another knife-catch long trade showing attractive positive divergence.  Price is bludgeoned from 20 to 12, a whopping -40%, in two months time. The weekly chart shows the steady downward-sloping channel that has beaten price lower for three years. The lower lows and lower highs continue. The beatings should come to an end in here and allow PBR to base and recover. The weekly and daily charts show universal agreement with oversold conditions, falling wedges and positive divergence. The MACD line on the daily is leaking by a touch but if you move back to a yearly basis, the MACD line is positively diverged overall, so that blip lower is not important.

The red circles on the weekly chart show capitulatory selling with the high volume spikes. These are folks that held on as PBR dropped, and dropped, and dropped. Over the last two weeks, many of these die-hard long holders threw in the towel yelling "Get me the h*ll out," giving up on the stock. That is typically when they turn, however, like with WLT recently, sometimes the capitulatory selling turns into an uber capitulatory event. Projection is for a bounce to occur for PBR and a continued sideways to sideways up move going forward. Keystone holds a long position in PBR. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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