PBR's Potential Upside - Market Analysis for Jun 27th, 2024

PBR (Petrobras)-- This AM, BofA upgraded PBR to Buy from Neutral, with a Target Price of 17.90. Currently, PBR is trading up 2% at 14.50 in pre-market trading.

Back on February 16, 2024, in response to fellow member Bloom's request for a technical outlook on PBR with the stock trading at 17.78 at the time, I commented: PBR looks like it is about to erupt from a 12-14 YEAR base-accumulation period and pattern that has the potential to propel PBR considerably higher during the ensuing months and YEARS! As long as any forthcoming weakness is contained above 15.50/60, PBR is poised for upside acceleration... 

As it turned out, the February 16, 2024 high at 17.80 represented a false upside breakout that repelled buyers and turned PBR to the downside for a slide into the June 16, 2024, low at 13.36. 

The $64,000 question is whether the technical and fundamental setup support another upmove that will challenge and hurdle resistance that unleashes the 12-14 YEAR base-accumulation formation shown on my attached Weekly Chart? 

For anyone who can tie up money in PBR for the next 12 months, my answer is "yes." Technically, as long as the 11.50-12.30 support zone contains any additional weakness, representing the 200 WEEK MA and the dominant up trendline off of the March 2020 Pandemic Low (see chart), PBR's upside potential is enormous. 

Add to the intermediate-term technical setup BofA's comment that it is time to load up on shares of Petrobras after the replacement of the company's CEO, favorable resolution of disputes involving federal taxes, and increasing cash flow coupled with steady to moderating capital expenditures... and perhaps an "improving storm" of beneficial factors that provide the underlying fundamental support overlaid on a HUGE BOTTOM FORMATION will propel PBR considerably higher in the weeks and months ahead... Last is 14.49/51...