During times of heightened volatility in markets, I have observed that markets have a tendency to mean revert to their long-term moving averages (my favourites are the 55 and 200-week moving averages) and I noticed this beautiful set- up on the IBOV weekly chart (Brazilian stock market). Not only did the market test and bounce off the 200 week-moving average twice at the end of 2021 and the beginning of 2022 (200-week ma is currently at 101159), but we have just hit the 55-week ma at 115636.
So, what does this mean? Well, after an almost 15% rally this year, I would prepare for some profit taking at the 55-week ma. Adding to this resistance is the 200-day moving average at approx. 115321 AND the 50% retracement of the move down from June 2021 to December 2021 at 115560, this is a veritable WALL of resistance, and we would allow for a set-back towards the 55-day ma at 107925. It seems to still be in a longer term up move so we would expect to see some stabilisation around here.
Disclaimer:
The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
So, what does this mean? Well, after an almost 15% rally this year, I would prepare for some profit taking at the 55-week ma. Adding to this resistance is the 200-day moving average at approx. 115321 AND the 50% retracement of the move down from June 2021 to December 2021 at 115560, this is a veritable WALL of resistance, and we would allow for a set-back towards the 55-day ma at 107925. It seems to still be in a longer term up move so we would expect to see some stabilisation around here.
Disclaimer:
The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
The STA is the oldest technical analysis organisation in the world and to celebrate that fact, we have a free downloadable book on technical analysis here -
www.technicalanalysts.com
www.technicalanalysts.com