Banco Bradesco SA (ADR) (NYSE:BBD) Is Trying To Create A Bottom

Denver, CO, 08/16/2013 (Avauncer.com) – Banco Bradesco SA (ADR) (NYSE:BBD) (Closed: $12.45, Down: 1.50%) opened weak on Thursday and despite a late attempt to recover the losses, it only managed to close a bit off the lows and above the opening price, creating a green candle. The volume at 13 million was higher than the average volume of 10 million.

The stock had its major bottom at $1 in 2002 and after a sideways to up range bound movement for 2 years, it exploded from the 2004 bottom of $1.76 and reached $22.95 by 2008, interrupted only 3 times in any major way. After a quick crash to $6.72 in the same year as the top, it rebounded to $20.63 by 2009. The next bear market was not swift and it created a huge down sloping range. In this range, we can see 5 broader moves, all nearly equal in magnitude by the degree of roughly 7-8 points. This signals that the long term bear market is not finished yet and at most we can expect a big bounce from the current swing low, but it is expected to fall again after that and remain in the range for a long time yet.

The July 2013 low of $11.29 was very close to the lower boundary of the channel in the arithmetic scale but in the logarithmic scale, it has already hit it exactly. That makes it a major bottom for a few months at least.

In the daily chart, we can see an attempt to make a range and hence a bottom. The rise in volume at the lower levels in the zone of $11 - $13 tells about a potential accumulation going on but the price must confirm it by further strength. That would come when the price manages to cross and sustain above $12.92 & $13.42. Till then, the risk of more downside remains.