Technical Update - Ørsted trying to reverse downtrend after earnings. Will it succeed?
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Energy company Ørsted is trying to reverse bearish trend but strong overhead resistance could prove too strong. Medium-term down trend likely to resume. DKK 649 and 588 are key levels.
Ørsted A/S opened lower after earnings this morning but seems to trade higher after bouncing from lower rising trend line in what could be an Ascending triangle pattern (Ascending triangle is a triangle where upper trendline is almost horizontal and lower line is rising). Ørsted could be stuck in a tighter range before breakout. If it breaks out to the upside i.e., a close above 649.20 could fuel a rally to around DKK 725-749. Some resistance around 680.
But if Ørsted breaks below lower rising trendline the bear trend is likely to resume. A break below today’s low at 588 would be strong signal for lower levels.
If that occurs RSI is likely to break below its rising trend line and back below 40 threshold which would be a strong indication of October lows around 567 to be taken out.
If the bearish scenario plays out and Ørsted breaks below October trough, there is downside potential to 451-408. As can be seen from the weekly chart Ørsted formed a Symmetrical triangle pattern in Q2-Q3 and broke bearish out.
Following a triangle break out the share price has the potential to move equal length as the distance between the top and bottom of the triangle illustrated by the two vertical arrows.
There is no divergence on RSI indicating lower price levels.
However, if the bullish scenario plays out as described earlier i.e., where Ørsted closes above 649.20 the share price could test the underside of the lower rising trendline in the Symmetrical triangle i.e., a move to around DKK749 and 0.618 retracement of the July to October sell-off.
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