Looking at the Unilever stock (LON: ULVR), which is traded on the London Stock Exchange, it sold off heavily after their earnings report showed a fall in sales of one of their big brands, producing ice cream. This was due to bad weather in both Europe and North America. Form the technical side, even before the earnings announcement, the stock was already trading below its medium-term upside support line drawn from the low of March 4th. But after the company figures were released, the share price fell below its key support zone, at 4966, which marks the low of July 12th. ULVR travelled all the way to the 200 EMA on the 4-hour chart and even fell slightly below it, almost hitting another key support area, at 4816. That area is the low of June 27th. Although there is a small possibility of seeing a correction back up, still, we will remain sceptical about larger extensions to the upside, hence why we will stay bearish for now.
In order to get comfortable with further downside, a break below the above-mentioned 4816 hurdle is required. This could increase the stock’s chances of drifting further south, as some investors may start liquidating their Unilever positions. The share price might initially target the 4742 obstacle, a break of which could send the stock to the 4672 level, marked by the highest point of April.
Our oscillators, the RSI and the MACD, suggest that the above-discussed scenario has a good chance of playing out. The RSI is well below 50 and not far from the 20 territory, at the same time pointing to the downside. The MACD is not giving any hopes for the bulls either, at the moment. The indicator is pointing lower by sitting below its zero and trigger lines.
On the upside, if the ULVR makes a push through the 4966 barrier, marked by the low of July 12th, this may open the door to the 5009 obstacle, or even to the 5088 area. That area is the highest point of this week and may initially stall the stock, or even force it to retrace slightly lower. But as long as the share price remains above the 5000 mark, we will stay positive over the short-term outlook. Another price-acceleration and a break of the 5088 zone, may lift ULVR to its all-time high level, at 5120, which was reached on July 17th.
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