Did Ambev S.A. (ABEV) Trigger A Buy Signal?

Ambev S.A. (NYSE:ABEV) gained 0.75% in yesterday’s session, going up from its prior closing price of $6.69 to $6.74, and has now recorded rally in 5 consecutive sessions. Many in the market will be closely watching whether this winning streak is sustainable or take a temporary pause for the next couple of trading sessions. The stock price went upward in 8 of the last 10 days and has generated 8.01% during the last two weeks. Trading activity decreased by -6.13 million shares, and in total, 14.35 M shares exchanged hands for about $96.70 million. It should be noted that increasing price and decreasing volume show lack of interest and this is a warning that something has fundamentally changed.

Inside ABEV’s Recent Trend

Ambev S.A. (ABEV) lies in the upper part of a strong rising trend in the short term, and this will normally pose a very good selling opportunity for the short-term trader as reaction back towards the lower part of the trend can be expected. A break-up at the top trend line at $6.77 will firstly indicate a stronger raising rate. Short-term traders are predicted to see a rally of 21.9% over the course of a quarter and, with 90% chance the price will be floating in the range of $7.67 and $8.25 in this timeframe.

Ambev S.A. Technical Signals

ABEV has witnessed its long term and short term MA triggering a buy signal. Many traders watch for short-term averages to cross above long-term averages to signal the beginning of a uptrend. Upon corrections, the price will meet support from the averages between $6.56 and $6.25. A break down through these support points will trigger sell signals. Its pivot point low generated buy signal on Tuesday August 22, 2017, which calls for additional surge until the stock forms a new pivot point high. There was a decrease in volume but the price rose. This is usually not interpreted as a good sign as traders widely believe falling volume should see declining stock. Investors should be watching the price action like a hawk in the coming sessions.

Ambev S.A. (NYSE:ABEV) Support And Resistance Levels

In case of pullback, the next support the price will capture from accumulated volume will not be far away from current price at $6.12 and $5.49. It seems to be blessed by the accumulated volume as it meets no resistance above current level and favorable trading conditions will help the stock to show strong performance in the coming days.

It is important to note, however, that the stock needs to make its way through natural risk while testing a key support level. Once this support is broken, another support level will be to be established at a lower level. Turning back to this stock, Ambev SA approaches the first support point just current price at $6.12. In case of a break, the next support we will see from accumulated volume is going to be at $5.49 and $5.34.

Ambev S.A. (ABEV) Risk Assessment

The number of shares changed hands in the stock is good, indicating the interest and low risk associated with it. In the most recent session, the stock price hovered around $0.15 (2.26%) between intraday high and intraday low. Each day in the past 1 week, the average volatility remained at 1.98%.

The stock is in overbought condition based on RSI(14) readings and sits at the top end of the trend. In general, this offers great exit point for the short term traders. The RSI above 70 combined with the trend position poses greater risk so increased volatility should be expected. The stock correction is due. The decline may accelerate to the downside in the near term but it is reasonable to consider what the key support levels may be that would support a bounce back to the upside for stock.

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