Trading Idea closing - Renewable ETF
Related content
Commodities - Technical Analysis
Signs of a turnaround have emerged for gold and silver, and a strong upward move could trigger the next upward wave. A breakout above the key downtrend lines could also be on the horizon, which would further reinforce the positive turnaround. The price of oil has broken below the 100-day moving average, weakening the bullish outlook, and with the uptrend broken, it has entered a correction phase. Natural gas is showing a correction following a sharp decline, but has not yet managed to break through its downtrend line. Copper continues to trade within a wide range and is approaching the lower end of that range. Following a significant decline, wheat and corn prices have reached key support levels from which an upward correction—or even a new uptrend—is likely to begin.
FX - Technical Analysis
The dollar's momentum has eased, but confirming a trend reversal would require a decisive bearish session against the euro. Against the British pound, however, the exchange rate remains in an uptrend. EUR/HUF continues to trade within a narrowing range, while the dollar remains in an uptrend against the forint. USD/JPY has broken out to the upside from its consolidation pattern, suggesting further upside potential. EUR/CHF previously broke below a key support level that had defined its uptrend, and the pair is now characterized by a downtrend.
Our trading idea related to the IQQH ETF, which tracks the renewable energy sector has performed well since we published it in early July. We continue to view the sector's long-term outlook as favorable, but given the broader market uncertainty seen in recent days, sharper corrections are possible in the short-term, so it may be worth closing positions for now and realizing the 17-18% profit achieved so far.
Fundamental picture
The IQQH ETF (iShares Global Clean Energy Transition UCITS ETF) includes a mix of renewable energy utilities and manufacturers involved in the sector's supply chain (e.g., solar panels, wind turbines, etc.). We consider the long-term outlook for both segments to be favorable, as global electricity consumption is likely to continue to grow rapidly in the coming years thanks to a number of major megatrends (e.g., electrification, data centers / AI, cooling and heating, etc.).
The renewable energy sector has performed particularly well in recent months, as the market had already priced in almost all the negatives in the period leading up to the Trump administration's legislative package passed in early July, leaving room for a rise. This was helped by several factors: the US Federal Reserve's interest rate cuts in September and October, and the regulatory uncertainty has also ended (the final version of the July legislative package was also milder than expected).
However, investor uncertainty surrounding the AI sector has intensified in recent weeks, dragging down broader market sentiment and the major stock indices as well. In addition, uncertainty surrounds the Fed's December interest rate cut (e.g., mixed labor market data and lack of data due to the government shutdown), which also complicates the situation for investors.
Although the ETF’s price has not yet reached our stop level, which was raised in October (up to EUR 7.7), we are closing our trading idea due to the aforementioned market uncertainty, and it may be worth realizing the profit of ~17-18% achieved so far.
Technical picture
The curve gave long closing signals because falling below 8.2 activated a reversal pattern. In the longer term, however, the long opportunity does not necessarily have to be abandoned. The 7-7.4 range is a strong support level, and if it returns here and remains above the trend line, the long-term outlook may remain positive. In the short-term, however, a correction may occur, so it may be worth exiting the position.
Get more out of your investments!
Global Markets Services
OTP Global Markets offers a broad range of services in the field of local and international money and capital markets.
Read morePrivate Banking Services
Personal care and expertise with OTP Private Banking, along with the knowledge, security, and innovations of a multinational banking group.
Read more