After reaching an all-time high, at 297.10, on July 2nd, the stock of L'Oreal SA (EPA: OR) started moving lower. The share price continued to decline and yesterday it broke below a short-term tentative upside support line taken from the low of June 15th. Such a move might have paused new investors from jumping into the stock. There is a possibility to see a drift lower in the near term, however, let’s not forget that this move down could still be part of a larger correction, as OR continues to trade above another short-term tentative upside line, which is drawn from the low of May 14th.
Another drop below yesterday’s low, at 286.40, could open the way towards lower areas. The stock may end up sliding to the current lowest point of July, at 282.00, or even to the 280.30 zone, marked by the low of June 29th. Initially, OR might get a hold-up around there, but if there are still no takers of the stock around those levels, this could cause another fall, potentially opening the door to the low of June 25th, at 274.60. Slightly below it sits another potential support area, at 272.70, which is the high of June 4th.
Looking at the oscillators, the RSI and the MACD on our 4-hour chart, we can notice that both started pointing lower. In addition to that, the RSI has also just dropped slightly below 50 and the MACD continues to run below its trigger line, but still remains above zero. The RSI suggest there is increasing downside momentum, whereas the MACD is not yet indicating that. This somewhat supports the idea of a short-term corrective move in the L’Oreal stock.
Alternatively, if the share price rises above the 290.10 barrier, marked by the low of July 6th and the high of July 7th, that may well interest more buyers again. OR could travel to the current highest point of this week, at 293.99, a break of which might set the stage for a push to the highest point ever reached, at 297.10.
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