First up this week is Itau Unibanco (ITUB), the $86 billion Brazilian bank. Even though ITUB is thousands of miles away from big domestic banks' shenanigans, this stock hasn't been spared from the selling that's hit the financial sector -- shares of ITUB have slid 21% year-to-date. But the setup in ITUB right now suggests that it may have found a bottom.
ITUB is currently forming an ascending triangle right now, a setup that's identified by a staunch resistance level to the upside (in this case at $19) and uptrending support below. Typically, ascending triangles are considered continuation patterns rather than reversal patterns, but in practice, it's not uncommon to see triangles indicating a reversal. ITUB is a perfect example of that.
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It's important to remember that even though ITUB is within a hair's breadth of $19 resistance this morning, it's a price level that's acted as a "ceiling" the last three times shares have tried to push through it. For that reason it's crucial to wait for an actual breakout above $19 before becoming a buyer of this stock.
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