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.
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