Our assumptions regarding the movement of American depositary receipts of Brazilian mining company Vale, presented in the preceding analysis, justified. Prices for some time stayed close to the level of 26,50, and then slowly continued their upward movement and reached the mark in 30,65, where the level of 61,8% of Fibonacci (Fig. 1). However, to break the resistance specified ADRs failed, and they rushed back to the level of 50% Fibonacci.

Fig. 1

Weekly dynamics ADRs Vale

 

 

Source: Reuters

 

Currently the weekly chart convergence of moving averages with a period of 8 and 21 indicates a weakening of the uptrend (Fig. 1). Lines MACD indicator on the weekly chart (Figure 2) intersected, which is usually a strong enough signal to sell. However, other indicators are presented in Fig. 2, have not confirmed such an action. Thus, the line changes direction indicator is located above the DM-DM, and the line ADX, despite the reversal, had no time to drop significantly, slowing their movement. The Stochastic RSI oscillator is also on its way down met with resistance and had swept away the wave number of ardor. Nevertheless, it is worth noting divergence observed in the graphs of prices and the RSI indicator and marked in Fig. 3 purple lines. Thus, the price on the weekly schedule from November last year, continues to conquer new peaks, while the corresponding local maxima of a stochastic oscillator under consideration, on the contrary, showing a decrease. This movement is usually a sign of price stabilization, which may be follo1000wed by a strong correction.

 

Fig. 2

Indicators DM and-DM, ADX, MACD, RSI (weekly Dynamics)

 

 

Source: Reuters

 

Fig. 3

Weekly dynamics ADRs Vale and Stochastics RSI

 

 

Source: Reuters

 

Thus, the analysis of weekly charts of price movements of American depositary receipts of Brazilian mining company Vale can be concluded a possible correction, indicated by the convergence of exponential moving averages, the divergence of timetables, prices and an indicator RSI, and intersections of lines MACD. The closest level of support will make a mark in 26,58 (50% Fibonacci). Close to the specified value at the moment are moving average with period 21 and the centerline of Bollinger Bands (Fig. 4), which can also act as a support when moving downwards. In the case of crossing the midline of Bollinger Bands is possible to reduce to the lower limit. If the RSI indicator will turn up, and following its peak corresponding to a new high in the chart price will lie above the previous one, then we can talk about the end of the correction and extension of the current uptrend.

 

Fig. 4

Weekly dynamics of ADRs Vale and Bollinger bands

 

Source: Reuters

 

On the daily charts (Fig. 5) the price of American depository receipts Vale have already reached the lower limit of Bollinger Bands, but the divergence line indicator points to the strengthening of the dynamics of the course in the current (downward) direction. Moving averages with period 21 and 55, as in the case with the weekly charts, were aimed at convergence, pointing to a weakening uptrend.

 

Fig. 5

Day dynamics ADRs Vale and Bollinger bands

 

 

Source: Reuters

 

Lines trend indicator MACD (Fig. 6) crossed in the second half of January and went down, and the line-DM indicator directional change lies above the line of DM, while the curve ADX increases. Such changes in these indicators generally shows a decline, which we probably will see in the coming days. Nevertheless, one of the slow stochastically already entered the oversold zone. In the event of reversal, we expect a slight upward movement. If the above trend indicators will also change the current direction, it can serve as a good signal to buy.

 

Fig. 6

Indicators DM and-DM, ADX, MACD and slow stochastics (daily dynamics)

 

 

Source: Reuters

 

Relative Strength Index1000RSI (Fig. 7) is on track to oversold. In addition, the daily charts we are again confronted with the divergence, since the last local maximum of the indicator under consideration is lower than the previous one, while prices continue to update the maxima.

 

Fig. 7

Daily dynamics ADRs Vale and Stochastics RSI

 

 

Source: Reuters

Thus, considered indicators on daily charts at this time also indicate a decrease in prices of American Depositary Receipts Vale in the short term. Levels of support may make the lower limit of Bollinger Bands, the level of 50% by Fibonacci. In the case of prolonged reduction in the price can run into the lower border of the ascending corridor, marked in Figure 1 dark blue line.

As a result of technical analysis, we can conclude that in the coming weeks, the price of American depository receipts Vale, will likely decline. Nevertheless, on the daily charts, we can observe a slight bounce up, a signal which can serve as a way out of slow stochastically from oversold zone. Other indicators on daily charts at this time also show a decline in the fiscal instrument in the near future.

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