The Vale ADR (VALE) has made a strong base pattern over the past two years and this base could support a strong upside move this year. I anticipate that commodity plays will be outperformers in 2017 and VALE fits the bill.
We covered the promising-looking charts of VALE at the end of October, noting at that time, "In this daily chart of VALE... we can see an eight-month triangle formation. VALE makes higher lows at $3.50 and then at $4.00 and $5.00 while on the upside the same high holds around $6.10. Prices finally broke out over $6.10 this month. The height of this triangle pattern added to the breakout point gives us a price target in the $8.50/$8.75 area."
Now that VALE has reached our price target, let's look at some updated charts and indicators to see what's next.
In this daily chart of VALE, above, we can see that prices have traded higher over the past year -- more than tripling from their nadir in January. Prices are above the rising, 50-day moving average line and the rising, 200-day average. The On-Balance-Volume (OBV) line has been rising the entire time, and tells us that buyers have been aggressive with the amount of trading being heavier on days when VALE closed higher.
In the lower panel, the Moving Average Convergence Divergence (MACD) oscillator has been above the zero line for much of 2016 -- and is now poised to signal a fresh go-long message.
This three-year weekly chart of VALE, above, is a keeper. Prices are above the rising, 40-week moving average line. The weekly OBV line has been very positive for the past year and the MACD oscillator is very bullish. Get the picture? BULLISH.
In this long-term Point and Figure chart of VALE, above, we can see that prices are in the process of breaking a very long-term downtrend. This is also very bullish. This chart gives a price target of $10, but I look for gains in 2017 to around the $16.00 area. You can buy VALE here or you can buy it higher.