Bovespa First Correction (D)
Created on Tuesday, 15 March 2016 04:35
Written by Austin Galt
The Brazillian stock index, the Bovespa, rocketed higher parabolic style at the beginning of March 2016 and now looks to have just begun to correct so let’s update the daily chart.
BOVESPA DAILY CHART
We can see that massive run higher which marginally surpassed the previous swing high level denoted by the horizontal line. Price hit a high yesterday at 50166 before reversing back down and making a bearish outside reversal candle. Price has followed through to the downside today so the correction does indeed look underway now.
The Bollinger Bands show price recently leaving the upper band and the next stop is the middle band.
The Fibonacci Fan shows the 23.6% angle providing some support recently but that has now broken as of today and I suspect the final higher low will be around support from the 88.6% angle.
I have added Fibonacci retracement levels of the move higher. First corrections often make deep retracements and I am targeting the higher low to be around the 76.4% or 88.6% levels which stand at 40142 and 38542 respectively.
The RSI shows a little bearish divergence at this high while the MACD indicator has just made a bearish crossover.
So, just as price traded higher at a quick rate, I suspect the move back down will also be fairly rapid. And once the higher low is in place then I expect an uptrend will take price to new highs.