Itaú Unibanco: Resistance Breakout May Indicate Uptrend Movement

2 years ago 641 views 4 min read

André Cardoso

Analyst

Forex Analytix

Itaú Unibanco: Resistance Breakout May Indicate Uptrend Movement

The largest private bank in Brazil and one of the largest in Latin America recently faced a previous resistance formed in December 2019, located at 27.70 BRL. Currently, there is resistance at 29.46 BRL, and a breakout above the fractal could lead to an uptrend movement towards a Fibonacci extension projected at 35.12 BRL.

If this movement above the fractal resistance is confirmed, a bearish crab pattern could form at 161.8% Fibonacci extension, which in turn may trigger a new retracement.

Therefore, it is suggested to take a buy position above 30 BRL, focusing on the Golden Fibonacci projected at 35.12 BRL, which is equivalent to a movement of about 19%.

For risk management, it is essential to consider that any threat to 27.70 BRL(previous resistance and recent support)* may open the door to a significant drop.

Bradespar: resilience in support zone

Bradespar S.A.: Bradespar is an investment holding company owned by the Bradesco Group. It holds equity interests in other companies, including a significant stake in Vale S.A.

Who is Vale S.A.?

Vale is one of the world’s largest producers of iron ore and pellets. In addition, the company is a major global producer of nickel, coal, copper, cobalt, manganese, and ferroalloys. Its operations span multiple countries, and Vale plays a crucial role in the global mining industry.

Bradespar has shown resilience in not falling below 21.16 BRL. And for now, we don’t know how long we will remain in this support zone, which was reinforced previously in November 2021 and a year later in August 2022.

It is certain that breaking below this support zone will weaken the *holding*, which we should not ignore, but on the other hand, we already have some signs in terms of previous price behavior that can give us some guidance.

Going back to November 2021, a technical double bottom was formed *(detectable in a lower timeframe)* which was confirmed when the price broke through the resistance of 21.81 BRL. This double technical bottom projected the stock to new highs with a 70% move above resistance.

In August 2022, another double bottom was formed with resistance at 24.07 BRL. After its break, the stock presented an upward movement of 36.85%.

Now we are facing the eventual formation of a new technical double bottom. We have resistance at 26.96 BRL, and the clear break of this fractal resistance zone can generate an upward movement to 27.23 BRL or even higher.

On the other hand, a break of the support formed at 21.16 BRL will invalidate the possibility of this technical double bottom developing, which could open the door to a more significant retracement of the asset.

The trading idea is to wait for the break of the resistance positioned at 23.96 BRL and try to take advantage of the upward movement that may arise above the fractal. The standard target zone points to 27.23 BRL, which equals a projection of about 13.6% above the resistance fractal.