Technical Update - ASML higher after earnings but down trend intact. Will that change?
Kim Cramer Larsson
Technical Analyst, Saxo Bank
ASML jumped on earnings but down trend is intact. There is strong overhead resistance and selling could soon resume. But maybe an interesting pattern is developing on the weekly chart
ASML jumped after earnings announcement this morning, but trend is still down. The share price would need to close above €482 to demolish that picture and above 506.70 to reverse the downtrend.
Daily RSI shows negative sentiment and no divergence supporting the view that ASML could trade lower. If RSI gets rejected at the upper falling trendline expect the share price to resume downtrend which will be confirmed by a close below the 40 threshold. Add to that if ASML closes the price gap from today’s higher open down to yesterday’s close selling pressure is likely to accelerate.
RSI must close above 60 to turn positive.
Medium- to longer term ASML is trading in a wide falling channel. Two lower trendlines are drawn: One on the lows and one on the weekly closing prices. The more price points a line touches the stronger the trendline.
The upper falling trendline is shifted parallel from the lower lines.
For ASML to reverse this bearish trend a close abov580.50 is needed. However, first indication of this scenario to play out would be ASML breaking above the upper falling trendline.
But for now, the trend is down. There is divergence on RSI however, indicating a weakening of the trend. However, if ASML closes below 370.75 bear will resume. First indications of this scenario are as described in above for daily time period.
However, if ASML closes above 439.50 this Friday a strong bottom and reversal pattern will emerge on the weekly time period in the form of a Bullish Engulfing candle.
If ASML closes below 390.75 there is no strong support until around 299.70.
Latest Market Insights
Q4 Outlook 2022: Winter is coming
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.