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Robert Edwards
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Contrarian daytrading technician who specializes in locating high probability short term trades while predicting price movement directions with over 85% accuracy. Most of my trading involves either extremely short term micro scalping of stocks or commodities (using 1 minute bar charts), or swing... More
  • Petrobras (PBR) Is Approaching My Major Long-Term Support Target Of $10.17 2 comments
    Mar 7, 2014 3:52 PM | about stocks: PBR

    (click to enlarge)

    Back on 1/25/14 & 2/01/14, I wrote articles where I identified where long-term support should appear in Petrobras (NYSE:PBR) click here and here. I came up with a major target low in PBR of $10.17. If you review the above weekly chart, you will see that we are very close to that target now at $10.91. I ran the chart about an hour before the close so we might close a little higher or lower than $10.91 for the week, however, the important thing is that we are within less than $1 of our next major target low in PBR, and this should therefore be an excellent place to get long this stock.

    To review my previous analysis, I noticed how PBR made a stair-step drop to new lows over several months of trading. As shown in the above chart, one will notice that in early August 2011, PBR stopped falling at $24.13 before bouncing. The next low occurred the first week of October 2011 at $20.44, a new low by 15.3%. Then in late June 2012, PBR bottomed at $17.08, a new low by 16.4%. After bouncing back up, PBR eventually made another new low in the first week of March 2013, at $14.24, a drop of 16.6% below the previous low. Then in July 2013, PBR bottomed at $12.03, a drop of 15.5% from the previous low. If PBR should now make a new low by a similar percentage as it has been doing, say 15.5%, then one would expect a low to occur at $10.17.

    You will notice that 4 weeks ago, PBR did bottom at $10.63 but then bounced back to as high as $11.84. However, it has now dropped again below $11.00 and should bottom shortly.

    Now we can look at the daily chart to see where we stand currently as follows:

    (click to enlarge)

    You can see from this chart how just 4 weeks ago, PBR bottomed at $10.63 and then rallied back to $11.79, fell to $11.01 but then rallied to $11.84. The stock has now started down and hit a low today of $10.79 which is only 62 cents away from our $10.17 major bottom target level. We could have bottomed today, or we might bottom on a further retest Monday at the recent $10.63 low. However, if PBR continues to fall, it should stop somewhere around $10.17 down to maybe $10.00, where one would expect to see an initial bounce back above $11.00, and eventually up to $14 or higher. Over the past 5+ weeks, PBR has stopped falling and moved sideways. It can hardly fall more than 2 days in a row before bouncing back and closing up. If we did not bottom today, we should definitely hit a low on Monday, 3/10/14 in PBR. A major long-term low in PBR should occur any day as predicted in the above analysis. It will be fun to see how close $10.17 comes to the actual bottom.

    Disclaimer:

    The thoughts and opinions in this article, along with all stock talk posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.

    Disclosure: I am long PBR.

    Stocks: PBR
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  • Robert Edwards
    , contributor
    Comments (412) | Send Message
     
    Author’s reply » It has taken 9 weeks for PBR to fall from $11.84 to today's low of $10.79. During that time there were several bounces off of $11.00 support where one could have gone long and made some nice scalp and/or swing trades. I don't believe we will spend long trading under $11.00, but even if I am wrong, we should bounce several times off the $10.00 area back up to $11.00 which would then become resistance. PBR may not rally strongly anytime soon, but the downside from here should be quite limited and the worst we should experience is a lot of sideways action in a trading range. Scale trade buying every 5 to 10 cents lower, and partial selling on small rallies, should be quite profitable, while one treads water.
    7 Mar, 04:25 PM Reply Like
  • vfc1955
    , contributor
    Comments (26) | Send Message
     
    For what it is worth, PBR is treated by the Brazilian government as a piggy bank for non energy matters.

     

    Additionally, since it is owned by the government like PDVSA in Venezuela many jobs do not go to the best qualified but the best connected.

     

    Having said that, I nonetheless picked some up following your suggestions
    7 Mar, 04:35 PM Reply Like
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