Petrobras (PETR): Bearish Divergence - Heading for a Dip

After the market closed yesterday, Petrobras, a Brazilian stock, released a new earnings report. We're analyzing it in Brazilian Real (BRL) to get the most accurate view of the chart. On the weekly chart, we anticipate a mild but noticeable bearish divergence, especially since the beginning of 2024 when the stock has significantly appreciated.


There is considerable downside potential as we expect the completion of Wave (3), followed by a downward adjustment in Wave (4). The exact retracement level for Wave (4) is yet to be determined, but we anticipate a pullback to around 38.52% before the stock resumes its upward trajectory in Wave (5).

Our downside target is around 50 BRL, considering Petrobras' high dividend yield. This makes the stock attractive not only for its growth potential but also for its income-generating ability.

A closer look at the daily chart reveals potential scenarios for either the completion of Wave 5 or Wave (3), highlighting areas where bearish divergence becomes more apparent. This divergence is evident due to the significant impulsive rises in the stock over recent months and weeks, which have created several imbalances. Despite closing gaps and reaching new highs, a downward correction is likely needed before we can see further upward movement.

We anticipate that the correction in Wave (4) will take the stock lower, potentially reaching levels between 28.28 and 23.30 BRL.