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by Darius Anucauskas

Inditex Stock Is In A Tricky Spot

After forming a double top pattern with the peaks in January and February, the Inditex SA stock (BME: ITX) drifted heavily to the downside and ended up testing its long-term tentative upside support line drawn from the low of January 2nd, 2019. Although the price did pierce through that line, ITX still continues to balance above it. However, the stock seems to be struggling with moving back above its 200-day EMA. For now, we will take a neutral stance and wait for a clear break through one of our levels, before examining a further directional move.

If the aforementioned upside line continues to hold, this could be a good sign for new investors. That said, in order to get comfortable in examining higher areas, we would like to see a daily close back above the 200-day EMA and the 29.00 barrier, marked near the highest points of September and October 2019. This way we may target the 30.39 hurdle, which marks the lows of January 28th and February 3rd. Initially, the stock might get held around there, but if the buying continues, a further push north may lead to the 31.40 level, marked by the low of February 21st.

Looking at the RSI and the MACD on our daily chart, we can see that they are sending slightly mixed signals. The RSI is near 20 but started pointing higher. The MACD, on the other hand, continues to point lower, while running below its zero and trigger lines. That is why we will not put too much emphasis on them right now.

On the downside, if the previously-mentioned upside line breaks and the price falls below the 26.90 zone, which is near the lowest points of November and February, such a move would confirm a forthcoming lower low and could open the door to lower areas. That’s when ITX might drift to the 26.41 obstacle, a break of which may clear the way to the 25.32 territory, marked by the lowest point of August. Slightly below it lies another possible support level, at 25.00, marked by the lowest point of September 2019.

Inditex daily


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