Brazil Stock market: Bullish or Bearish Now?

Brazil Stock market:  Bullish or Bearish Now?

The Brazil Stock market has gone up drastically since the beginning of the year.     Price moved from 40k+ to 50K+ in 5 months!   The move was soo huge that the sentiment on the Weekly time frame went from bearish to bullish.

Let’s see what the charts tell us know.   We have to examine the higher time frames first due to the volatility that is occurring on a long term basis.

Below is the monthly time frame.   At the beginning of the year, the sentiment was bearish and starting a bearish trend.    The trend never really got a chance to continue at all.  Price moved up drastically and went back to the cloud at 54167 where it held.    The resistance of the bottom of the cloud is still keeping the sentiment bearish but we are in a bearish consolidation pattern now compared to a bearish trend.

2016-05-09_brazil_m

Below is the weekly time frame.  The sentiment has change to being bullish.  However, a trend can not start  unless price breaks the resistance at 54167.     There are two supports on the weekly time frame.   The first is a minor support at 49674.   The second is a major support at 46085.    The minor support has to hold in order price to have a high probability of reaching the resistance and breaking it.

2016-05-09_brazil_weekly

Below is the daily time frame.   The major support holding the bullish trend was at 51425.    If we close below that value today then the bullish trend is over and a major pull back can occur.   If the major pull back occurs, it will cause price to break the weekly/monthly support at 49674 which won’t be good.

2016-05-09_brazil_d

Overall, the Brazil market looks like it is now in a big consolidation pattern between 46085 and 54167.     If the resistance is broken, the market will enter a long term bullish trend.   If the support is broken, we will have a high probability of getting back to the opening price of 2016.

 

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About the Author Manesh Patel