Realist Analysis of the brazilian stock market index (IBOV)

Technical Analysis of the Bovespa Index

The Bovespa Index (Ibovespa) is the main reference for evaluating the performance of the Brazilian stock market. Despite political issues influencing the economy, this analysis will be strictly technical, based on price action behavior. Here, you will find an objective approach to understanding index movements without any subjective bias.


Monthly Analysis: The Risk of a Bearish Pivot

On the monthly chart, the biggest current risk is in the 118,000-point region. If Ibovespa trades below this level, it will confirm a bearish pivot, which could open space for steeper declines. Additionally, this movement could push the Relative Strength Index (RSI) into bearish territory, below the 50 level, signaling a downtrend. However, as of now, the index remains above this threshold, maintaining an upward configuration on the weekly chart.


Weekly Analysis: Retesting the Pivot Head

On the weekly chart, the uptrend is clear. The price broke above the 20-period Moving Average and is currently retesting the pivot head. For those who missed the breakout entry, this could be a good moment to consider entering during the pullback. If the index holds at this level, Fibonacci projections indicate a potential target around 133,000 points. The RSI also confirms this momentum, with higher highs and higher lows.


Daily Analysis: Testing Fibonacci Retracement

On the daily chart, Ibovespa’s recent rally is undergoing a correction down to the 38% Fibonacci retracement level. This level has previously served as support, suggesting it could be a good entry point for new buyers. Traders looking for a more precise entry may switch to lower timeframes, such as the 1-hour chart.

Ibovespa’s movements can also be traded using derivatives such as:

  • Mini index futures (WIN) and mini dollar futures (WDO), ideal for day traders.
  • BOVA11, an ETF that replicates the index’s performance for long-term investors.

Conclusion: A Market at a Decision Point

The Brazilian stock market maintains a bullish trend on the weekly and daily charts, while the monthly chart remains at a critical juncture. A confirmed bearish pivot on the monthly chart could change the entire scenario. To monitor this possibility, traders should watch the weekly chart: if the index forms a lower high and breaks below the 20-period moving average, it could signal an early warning of a monthly downtrend confirmation.

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