OMXS30 – OMXS30 at significant resistance level…

OMXS30 – OMXS30 at significant resistance level…

25 September 2017 from Tradingportalen

Last week OMXS30 started showing signs of strength. Short-term technical view is believed to be positive. OMXS30 is currently trading at resistance area around 1600. Technically the market is believed to be overbought, and volume patterns are still negative. Long-term technical view shows signs of potential weakness, which is a bit tricky. In case OMXS30 starts finding clear ground above 1603, we might be looking at further strength. Preferably during a time with increasing market activity. Resistance area up ahead is located around 1630. Potential weakness in the market could come to light, in case OMXS30 break support levels located at around 1591, 1576, and around 1560.

Last week Nasdaq OMX continued to gain ground during low market activity. Stock index OMXS30 closed the week at 1600.77, gaining +0.8 percent during the past week. The index has gained +5.5 percent this year, +8.8 percent if we adjust for dividends.

During the past week, OMXS30 traded above 1600-level for the first time in two months. During this time, the index has traded as low as 1517.8 on august 29. During this period of recovery, slight concern has dampened the sentiment in the market.

The U.S dollar has stopped losing ground, and the exchange of words between U.S and North Korea has been just that, exchange of words… Since Angela Merkel won the German election, upcoming tightening in regards to monetary policy is no longer a critical matter. With all that said, any upcoming worries could still be a trigger for upcoming mayhem. At the moment, there is still a slight risk appetite in the market.

Primarily bank was strong among OMXS30 the past week, fueled by hawkish Federal Reserve’s on Wednesday in regards to future monetary policy.

Popular amongst Swedish investors, Volvo traded at a new all time high 153.1 kronor, right above previous high of 153 kronor back in July 2007. On the same list of popular stocks, Fingerprint Cards fell -29 percent during the week, after profit warning and several financial services firms lowered their recommendations and price targets.

Last week OMXS30 showed strength, when it broke resistance level at 1591. Short-term we already projected a potential test of 1600 if resistance broke, which OMXS30 surely did. The index also found strength enough to close right above this sentimental 1600-level.

Daily chart of the OMXS30 between the 8th of May 2017 and the 22nd of September 2017                         source: Aktiespararna

The market activity is still considered to be relatively low, and the market turnover is pretty much unchanged during days when the market has been trading higher as well as lower. Instead there is a slight strength from sellers considering volume pattern.

We might be looking at a final blow-out phase, before a potential drop. This basically means we might be looking at trading higher, before the market turns to lower move up ahead.

It could equally mean that we might see a lower move already at this stage. In such a case, we keep a close eye on technical support levels nearby.

There is also the possibility that we could be looking at a change of heart. Market turnover might be starting to show increasing strength, whereas a turnover of well above 22-25 billion per day when the market moves higher would be considered a sign of strength.

With a little bit of luck this might be the case, and would be considered a sign of strength based on a more long-term view.

In case OMXS30 starts finding ground above resistance area around 1600, and around 1603, we might be looking at further strength up ahead. In such a case 1605 might be an interesting price level to keep an eye on, as this is a traditional 38.2 percent Fibonacci level.

Previously OMXS30 showed signs of strength, when it broke resistance at 1560, which was a potential sign of a move towards right above 1600, or 1604 to be more precise.

Sentimental 1600-area is believed to be a sensitive area. In case where OMXS30 find strong ground above this price level, we consider this as potential sign of further strength up ahead. In such a case, we are keeping a close eye on resistance area around 1630, as well as 1657.

Potential weakness could come to light, in case technical support at around 1591, 1576, 1560, 1536 and around 1518 breaks. In case this happens during a period of relatively strong market turnover, we might be looking at further weakness.

Stochastic-indicator is still at high and technically overbought levels. This on its own is not considered a sign of potential weakness up ahead, as the index can continue to be overbought for a longer period of time during a strong market.

Short-term trend, which we define as the strength or weakness for 20-day moving average is still showing signs of strength. Even the long-term trend defined as the 200-day moving average is equally showing signs of strength.

Since summer there has been signs of weakness, as it broke at that time support at 1600 during relatively high market activity, which is considered to be negative. Volume pattern has since then been negative. At this time OMXS30 started showing lower highs and lows.

Since then OMXS30 also showed a potential weakness, when the index experienced a “death cross” in technical terms, when 50-day moving average crossed 200-day moving average. This in itself is more considered to be a piece of the puzzle, rather than a sign of weakness on its own.

All in all, there are potential warning signs, that we might be looking at a short-term higher move, or at least that the index might be slowing down momentum.

In the hourly chart below, we are keeping a close eye on technical support at horizontal support level located at around 1591.

Hourly chart of the OMXS30 between the 4th of September 2017 and the 22nd of September 2017                              source: Aktiespararna

OMXS30 is currently trading around a sensitive location at 1600. Therefore we consider any potential weakness if we break support at around 1591, 1576 to be important to keep an eye on, especially during increasing market activity.

In case OMXS30 breaks support at 1591, we might be looking at another test of support around 1576, as well as 1560.

Based on a long-term view we are keeping a close eye on the volume pattern, as well as market activity. As breaking support or resistance during a time where market activity is relatively strong, might be a clearer guideline of what’s up ahead. OMXS30 also continues to show negative volume pattern.

Weekly chart of the OMXS30 between the 21st of September 2012 and the 22nd of September 2017                             source: Aktiespararna



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26/11/2022 10:38:00