Brazil's Gerdau Is a Low-Priced Steel Name to Consider

Gerdau S.A. (GGB) is a Brazilian-based manufacturer of steel products. We have covered other steel names on Real Money and this name "popped up" on a search so we checked on the charts. I find it interesting when you can find an industry that is rallying globally, in the U.S. and in many other countries. This tells you that the fundamentals are not localized. Let's check out the charts of GGB.

In this daily bar chart of GGB, below, we can see that prices declined from May to November but a bottom pattern has been playing out since September. GGB turned sideways and has rallied above the 50-day moving average line. Prices are below the flat 200-day line but a rally above $5.50 will change that.

The On-Balance-Volume (OBV) line shows a slight decline from May but also shows a slight improvement from November. The Moving Average Convergence Divergence (MACD) oscillator is still above the zero line after crossing above it in early December. 

In this weekly Japanese candlestick chart of GGB, below, we see a mixed picture. Prices are trading below the flat 40-week moving average line but are finding buying interest (support) in the $4.50-$4.00 area.

The three-year history of the OBV line shows a long rise and that is bullish. The MACD oscillator is still below the zero line but it has crossed to the upside for a cover shorts buy signal.

In this daily Point and Figure chart of GGB, below, we can see a lot of price history. Currently the software is projecting a potential upside price target in the $11 area.

In this weekly Point and Figure chart of GGB, below, we used close only price data and a five box reversal filter. Here the software is projecting a price target in the $22 area.

Bottom line strategy: Traders who are comfortable buying shares in a Brazilian company could probe the long side of GGB at current levels. Risk below $4.50. The $11 area is our first price target.

Employees of TheStreet are restricted from trading individual securities.