Petroleo Brasileiro (PBR) climbed above key near-term resistance at 34.30 on Monday, and the strength continues Tuesday, propelling the stock above more significant resistance at the prior significant rally peak at 35.19.

The hurdle of a prior rally peak triggered short covering that has brought in buyers to drive PBR to 35.40/45 so far, which is also the coordinate of the August-December resistance line.

The ability of PBR to hurdle and sustain above 35.40/45 will set-up a confrontation with critical intermediate-term resistance between 36.00 and 36.80. At this juncture, only a sudden downside reversal and decline that breaks back beneath 34.30 will seriously compromise the current powerful advance.

 

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.