Brazilian fintech stocks surge as Bolsonaro's lead puts Brazil on track to shift right
Brazilian fintech stocks surged as Bolsonaro's lead highlighted the possibility of a right-wing regime change in Brazil.
In conclusion, as the recent surge in the stock price has pushed it above the resistance level ($21.72) and into overbought territory, it is advisable to wait for a correction and stabilization near the support level ($18.79) before entering, rather than aggressively chasing the rally.
To begin with the conclusion, given the volatility driven by the overbought condition with an RSI of 71.9 and a sharp surge of +32.87%, and considering the price is currently above the resistance level of $21.72 provided for the day, we will adopt a conservative approach rather than chasing the rally—specifically, by waiting for volatility to subside and confirming whether the price can successfully establish a base at the support level of $18.79.
RSI(14) at 71.9 (overbought), moving averages not in proper alignment, volume 1.47x the 20-day average, 7-day volatility +3.0%
To put it bluntly, given the overbought condition with an RSI of 71.9 and the rapid surge at the time, we anticipated a conservative approach by exceeding the resistance level ($21.72). However, the actual result outperformed the projected return (-2.5%), recording a 12.6% increase and receiving an "OVERHIT" rating. While we identified that political tailwinds—namely expectations of a right-wing regime change in Brazil—alongside an increasing volume of news in the financial_services theme served as strong market momentum, we failed to fully capture the market's strong trend-driven rally due to being overly cautious about short-term overheating indicators and the dilution risk stemming from the offering disclosure (CRITICAL).
To state the conclusion first, for the next trade, even if there is a technical overbought zone or risk disclosures (such as offerings), when strong thematic momentum and political and economic mainstream favorable factors combine, we will flexibly adjust our criteria to leave room for the continuity of upward volatility rather than focusing solely on conservative avoidance.