ITUB Surges 3.57% as Bullish Candlestick Patterns and Moving Averages Signal Strong Short-Term Momentum

Candlestick Theory
The recent price action of Itau Unibanco Pref ADR (ITUB) reflects a two-day rally with a 3.57% surge on the most recent session, pushing the closing price to $8.99. Over the past two weeks, the candlestick patterns suggest a bullish bias, characterized by higher highs and higher lows, such as the 5.89% two-day gain and a sequence of closing prices above key psychological levels like $8.50. Key support levels appear to be forming around $7.45 (late January lows) and $7.04 (December 2025 trough), while resistance is evident near $8.93 (early February peak) and $9.105 (January 29 high). A potential bearish divergence in the form of a "shooting star" or "inverted hammer" near recent highs could signal exhaustion in the uptrend, but the absence of bearish engulfing patterns suggests buyers remain dominant.

Moving Average Theory
The 50-day moving average (MA) for ITUB is estimated at approximately $7.50, while the 100-day MA hovers around $7.30, both below the current price of $8.99. This suggests the stock is in a short-to-medium-term bullish trend, with the 50-day MA crossing above the 100-day MA in late January, signaling a "golden cross." The 200-day MA, at roughly $6.80, remains significantly lower, indicating a longer-term bearish bias. The price’s current position above both the 50 and 100-day MAs reinforces the near-term uptrend, but a break below the 100-day MA could trigger a re-evaluation of momentum.

MACD & KDJ Indicators

The MACD histogram shows positive divergence in the past two weeks, aligning with the price rally, while the signal line crossed above the MACD line in early February, confirming bullish momentum. The KDJ stochastic oscillator, however, indicates overbought conditions, with the %K line nearing 80 and the %D line at 75. This suggests a potential pullback, though the lack of bearish divergence in the MACD (prices still rising despite flattening MACD) implies the uptrend may persist. A bearish crossover in the KDJ oscillator could precede a short-term correction, but confirmation via price action is needed.

Bollinger Bands

Bollinger Bands have expanded significantly in recent weeks, reflecting heightened volatility. The current price of $8.99 sits near the upper band, indicating overbought conditions. Historical data shows the bands constricted in mid-January (around $7.20–$7.50), suggesting a period of consolidation before the recent breakout. If the price retests the lower band (currently near $7.30–$7.45), it may encounter support, but a failure to hold above the middle band ($7.65–$7.75) could signal a deeper correction.

Volume-Price Relationship

Trading volume has spiked alongside the recent rally, with the February 6 session recording 29.3 million shares traded, a 12-week high. This validates the sustainability of the upward move, as volume typically surges during breakouts. However, a decoupling between price gains and volume (e.g., lower volume on higher closes) could foreshadow weakening momentum. The consistent volume during the January–February rally supports the likelihood of continued bullish pressure, though a sharp drop in volume during a pullback might indicate bearish exhaustion.

Relative Strength Index (RSI)

The RSI for ITUB is currently above 70, entering overbought territory, which historically suggests a potential correction. However, the RSI has remained in overbought conditions for several weeks, indicating strong buying interest. A drop below 60 would signal weakening momentum, while a sustained move above 70 could prolong the uptrend. Caution is warranted, as the RSI has shown minor bearish divergence (lower highs) in late January, though it has since aligned with price action.

Fibonacci Retracement

Applying Fibonacci levels to the January 2025 low ($6.20) and February 2026 high ($9.105), key retracement levels include 38.2% at $7.65, 50% at $7.65, and 61.8% at $7.45. The price has recently tested the 38.2% and 50% levels, which now act as dynamic support. A breakdown below 61.8% ($7.45) could target the 78.6% level at $6.95, while a breakout above the 100% extension ($9.105) would signal a new bullish phase.

Convergence and Divergences

Strong confluence exists between the moving averages (bullish), Bollinger Bands (overbought but expanding), and volume (rising), all supporting the continuation of the uptrend. However, the KDJ oscillator’s overbought warning and potential RSI divergence highlight risks of a short-term pullback. No major divergences between MACD and price are evident, but a bearish KDJ crossover could trigger a retest of Fibonacci support levels. Traders should monitor the 50-day MA ($7.50) and $7.45 support for signs of sustainability or reversal.