From the beginning of this year, the Capgemini SA stock (EPA: CAP) continues to show good results, as it slowly grinds higher. From the technical side, what we have noticed on the daily chart is that the price structure is forming somewhat of a rising wedge pattern. After recently rebounding from the lower side of it, the stock is now trying to make its way higher towards the July highs. That said, let’s not forget that, according to textbooks, such formations, in the end, tend to break to the downside through the lower side of the pattern. But until that happens, we will stay somewhat more positive than negative over the short-term outlook.
A further push higher and a break above the 111.80 barrier, which (at the time of writing) continues to keep the price down, could spark interest among new buyers. If so, the stock may rise to the 114.85 hurdle, which could provide some sort of initial resistance for CAP. We could even see it correcting slightly lower. But if the price remains above the 111.80 zone, this may send the stock higher again, potentially breaking the 114.85 obstacle and targeting the 117.10 level, marked by the highest point of July. Slightly higher, sits the upper side of the rising wedge, which could get tested as well.
Looking at our oscillators, the RSI and the MACD, both seem to be showing upside momentum. The RSI had jumped above 50 and keeps pointing higher. The MACD is almost back above zero. The indicator is currently pointing up, while sitting above its trigger line. Both of our short-term momentum studies seem to be in support of the upside scenario, at least for now.
Alternatively, if the price breaks below the lower side of the rising wedge pattern and falls below the 105.85 hurdle, this could send CAP sliding further down, potentially aiming for the 104.40 hurdle, or even the 102.00 zone, marked by the lowest point of August. This is where an initial hold-up may occur, or the stock could even rebound back up a bit. That said, if the share price continues to trade below the lower side of the rising wedge, we would see a decent chance for another leg lower. A break of the 102.00 obstacle would confirm a forthcoming lower low on a shorter timeframe and the next potential support area might be the 98.70 level, marked near the high of June 5th and near the low of June 12th.
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