Gap and 200-day line defended
With a somewhat quiet pace, the DAX® continued to grow yesterday. This means that the upstream gap that broke the day before yesterday (11,968 to 12,133 points) not only persists, but the German standard values also solidify the recapture of the 200-day line (currently at 12,147 points). From now on, both together form a first massive retreat. Below this, the various highs and lows at 11,700 / 11,600 points and the 61.8% retracement of the February / March setback (11,679 points) define the next holding area. In the meantime, this has even been reinforced by the recovery trend since March 19 (currently at 11,624 points). As long as the last is valid, the bulls hold the scepter in their hands – despite probably opening easier today. In the hourly chart, the many highs at over 12,400 points catch the eye. In other words, the stock barometer is facing resistance here. On a daily basis, the behavior pattern described is reflected in two almost congruent daily highs (12,432 / 12,434 points). A sprint across these hurdles should release further strength in order to steer the old upward trend since December 2018 (currently at 12,717 points).
Trend reversal in progress
In contrast to many other individual stocks, the previous all-time high of Bayer shares (EUR 144.12) dates back to 2015. Accordingly, the past few years have not been easy for shareholders. In the long term, however, there are some hopeful signals, because the paper is working on a bottom. This thesis is supported by the current indicator constellation. In March, the highest trading volume was recorded since 2008, which suggests a classic “selling climax”. At the same time, RSI and MACD show positive divergences. The downward trend of recent years is therefore very mature. In the course of the oscillator there is even a downtrend break confirmed by a pullback. From a technical point of view, the share is now grappling with a decisive cross resistance: the combination of the 200-month line (currently at EUR 65.27) and the bearish trend since autumn 2017 (currently at EUR 68.36; see chart). If the liberation is successful, our trend reversal scenario will gain significant contours. A Fibonacci cluster of two different retracements (EUR 76.56 / EUR 76.65) or the previous high for the year (EUR 78.34) mark the next recovery goals if successful.
In front of new record levels?
Technically motivated investors love price trends like that of Microsoft shares. After all, it is a real marathon runner, who even the correction from February / March was ultimately unable to harm. Rather, the underlying house trend is absolutely intact. A relative strength according to Levy – sustainably above the threshold of 1 – serves on the one hand as evidence for this thesis and on the other hand raises hopes of a weekly closing price above the old all-time high of USD 190.66. In addition to the advance in “uncharted territory”, this course would have the charm that a classic “V formation” would finally be available (see chart). In purely arithmetic terms, a connection potential of over USD 55 can be derived in the event of success. Two Fibonacci projections of the spring correction at USD 213 and USD 227 respectively define noteworthy milestones on the way to exploiting the price potential outlined. In order not to jeopardize the constructive, technical starting point of the chart, the Microsoft share should no longer fall below the latest “swing low” of USD 176.60 at the end of May.
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