Vale (VALE3) shares are experiencing a ‘stacking’ movement as large investors enter, technical analysis shows

Ahead of Q3 results, shares of Vale (VALE3) are experiencing a “stacking” movement with the entry of major players who are buying shares passively – that is, regardless of price fluctuations in the short term. , shows technical analysis prepared by Anova Research upon request InfoMoney.

The research is based on technical analysis of the Wyckoff model, which seeks to predict market moves based on the pattern of “accumulation” – a period when institutional investors or large players buy stocks while the price is low or has stabilized – or “distribution”. ”, which is a reverse movement.

“October 20, starting the day with a gap Bears, VALE3 recorded one of the highest trading volumes in a short period of time, with more than one billion reais transacted between R$63.50 and R$62.50 in the first 60 minutes of trading,” the analysis highlighted.

Vale shares have already gained 2.65% this week by 15:15, this Thursday’s (26) trading session. By comparison, even with that gain, the stock has fallen 4.75% in recent days and is down 24% in 2023.

Therefore, from a short-term point of view, there is a “significant presence of institutional interest”. “This relapse reinforces and confirms our view that Vale is indeed in an advanced stage of accumulation,” says Paulo Martins, founder and CEO of Anova Research.

Variant Pricing (VALE3)

In this sense, based on the Wyckoff model, even though there may be a sudden drop in price in the next few trading sessions, this movement will be limited, opening up buying opportunities.

This attracts more attention from investors, especially before the results are announced. Analysts had expected the miner to report consistently better numbers, with ore output increasing while costs and challenges in China were kept under control.

“After balance, if VALE3 opens trading between R$61.50 and R$62.50, we intend to strengthen the position positional tradingtotal to stop about R$60.00,” he emphasizes.

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“For positions with a horizon of 1 to 6 months, a to stop protection is necessary when the asset trades below R$60.00, as this could lead to an acceleration of prices to the downside,” he adds.

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At the same time, Anova’s target price for the stock is 79.00 reais for a period of 1 to 3 months and 105 reais for the medium term, 6 to 12 months.

Source and development: Anova Research

In the top chart, we can see the movement of the big players (such as hedge funds, investment banks and pension funds, who have the ability to significantly influence the prices of assets in the market) issuing buy signals, while smaller participants, “pessimists “. “, close positions.

“Overcoming and maintaining negotiations above R$67.50 would confirm the thesis that all movements below this price in recent days were a ‘trap’ to force participants with less financial capacity to close their positions.” Therefore, the possibility of further price declines to lower levels would be significantly detrimental or unlikely,” says Martins.

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At the same time, the point “confirmation” of Vale’s actions is highlighted on the lower graph. In other words, as part of the Anova projection, “the starting point for the start of a new uptrend for the asset.”

Chinese market

The research also highlights that there are “signs of greater institutional interest” in the Chinese market alongside VALE3. “We believe that the recovery of the Chinese market can contribute to the flow of VALE3 in Brazil,” he emphasizes.

According to him, China plays a crucial role in the global ecosystem and, in particular, has a significant impact on Vale’s operations and financial condition.

“We note that several key Chinese assets are currently in support zones, showing signs of accumulation and institutional interest,” he added.

They include Tencent Holdings, Alibaba Group, Meituan Diaping, hina Construction Bank Corp, Ping An Insurance Group, JD.com, Baidu and NIO.

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These assets, which make up a significant portion of the XINA 11 ETF, are traded in regions historically dominated by institutional demand, the analysis highlights.

“The Chinese market is expected to enter a period of recovery in the near future, which is conducive to capital inflows for VALE3 in Brazil,” he concluded.

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