Technical Update - Ørsted trying to reverse downtrend after earnings. Will it succeed?
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
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.
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.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)