Since around the beginning of October, the Ubisoft Entertainment SA stock (EPA: UBI) continues to trade below a long-term downside resistance line taken from the high of October 3rd. But from the end of February this year, the share price started forming higher lows, trading above a medium-term upside support line drawn from the low of February 28th. In other words, UBI is coiling up on a bigger picture and we are waiting for a clear break through one of the sides, in order to examine a further directional move. In addition to that, from around the beginning of August, the price keeps on moving within a small range, roughly between the 69.80 and 74.20 levels. A break through one of the sides could also support a further move in the direction of the break. This is why for now we will stay neutral.
If UBI goes ahead and breaks through the aforementioned downside line and also pushes above the 74.20 barrier, which is the upper side of the range, this might spark some interest among potential new investors. Such a move may drive the stock further north, possibly aiming for the 78.54 zone, marked by the peak of July. The share price could initially stall around there, but if that zone is just seen as a temporary obstacle on UBI’s way higher, a break of it could lead to a test of the 82.54 level. That level marks the high of May 15th.
Both of our short-term momentum studies are currently flat. The RSI is moving around its 50 mark and the MACD is not showing any signs of willingness to push away from zero. For now, both indicators are in support of our neutrality in regards to the short-term outlook.
On the downside, a break of the lower side of the previously-discussed range, at 69.80, and a price-drop below the aforementioned upside line may force a few investors to liquidate some of their current positions. Such a move could send the stock to the 65.82 obstacle, a break of which may lead UBI to the 63.05 zone, which is the lowest point of February.
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