From the end of December, the Danone SA stock (DANO.P) was on a gradual move higher, trading above its medium-term upside trendline taken from the low of December 27th. But after failing to form a new higher high on September 12th, the stock reversed slightly to the downside, but ended up moving sideways. At the time of this analysis the price is breaking the above-discussed upside line. Such a move may be seen as a bearish indication, especially if we get a daily close below that trendline. Another negative sign, which may support the downside scenario, is a small head-and-shoulders pattern, with the “neckline” at 78.80. If DANO closes below that hurdle, this could also back the whole bearish outlook. For now, we will remain cautiously bearish, as we wait for a daily close below the above-mentioned lines.
If we eventually get a daily close below the aforementioned upside line and the “neckline”, this is when more investors might start liquidating on some of their positions. This may force the stock to slide even further, where it might end up testing the 76.70 hurdle, a break of which could open the door for a move to the 75.50 zone, marked by the low of August 7th. Initially, the price could stall around there, or even rebound back up a bit. But if the share price struggles to get back above the 78.80 barrier, we will remain sceptical about any further advances. DANO might then reverse lower again and drift towards the 75.50 obstacle, a break of which could set the stage for a test of the 74.30 level. That level held the price from moving lower on July 10th and 24th.
Looking at the RSI and the MACD, at the time of writing, both are showing downside momentum. Both indicators have topped around the beginning of September and have moved lower since then. The RSI is below 50 and points to the downside. Although the MACD is in the positive territory, it is rapidly moving towards the zero line. Both oscillators seem to be in support of the downside scenario, for now.
Alternatively, if the price rises back above the previously-mentioned trendline and climbs above the 81.35 barrier, marked near the highs of September 12th, 20th and 24th, this could interest more buyers and the downside scenario could be off the table for a while. The stock may then travel to its all-time high reached on September 5th, at 82.40, a break of which might clear the path to the uncharted territory.
The content we produce does not constitute investment advice or investment recommendation (should not be considered as such) and does not in any way constitute an invitation to acquire any financial instrument or product. The Group of Companies of JFD, its affiliates, agents, directors, officers or employees are not liable for any damages that may be caused by individual comments or statements by JFD analysts and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his investment decisions. Accordingly, you should seek, if you consider appropriate, relevant independent professional advice on the investment considered. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with the legal requirements for financial analyses and must therefore be viewed by the reader as marketing information. JFD prohibits the duplication or publication without explicit approval.
There are risks involved with trading of cash equities. Past performance is not indicative of future results. You should consider whether you can tolerate such losses before trading. Please read the full Risk Disclosure.
Copyright 2019 JFD Group Ltd.