Boston, MA 10/06/2014 (wallstreetpr) – Itau Unibanco Holding SA (ADR)(NYSE:ITUB) had a very volatile week but finally it managed to close near the very opening price, creating a long legged Doji weekly candle in the process. The weekly volatility of 3.76% supports the higher levels of movements though the longer term volatility remains much lower at 3.17%. The Doji candle at the end of a downtrend implies bearish exhaustion and a potential for reversal in the short term but this pattern also requires further confirmation from the next candle. The rise in volume to 20 million against the average of 10.7 million suggests buying coming at the lower levels and same kind of elevated volume on Thursday too enhances the bullish possibility.
Still one must consider the extremely vicious nature of the sell off the stock suffered from in the last 4 weeks. A V-shaped reversal cannot be negated but a proper reversal after this kind of drop usually requires a base-building for some time, which makes the reversal trustworthy.
In the long term, Itau Unibanco Holding SA (ADR) (NYSE:ITUB) remains in a firm downtrend and there is still no sign of it ending anytime soon. From 2002 to 2008, the stock had rallied furiously from $1.14 to $25.88 before succumbing to the bear attack. The next liquidity pump from the US Fed pushed the stock to a new life high by 2010, though barely above the 2008 high. The supply zone around $26 pushed the stock in another bear market which has not finished yet.
The September crash wiped out all the gain Itau Unibanco Holding SA (ADR) (NYSE:ITUB) had made in the previous two months. The indicators like the RSI and MACD point to possible weakness continuation in the coming days. The possibility of some more bounce can’t be ruled out but that could be better-used to exit the stock and find a better candidate for investment elsewhere.
