The Portuguese oil company has broken out from a classic trend-confirmation pattern
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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.
Up until the beginning of last week, a favorable technical picture had been emerging across European markets. However, Wednesday’s sudden reversal significantly altered the outlook. The key question in the coming days will be whether the major support levels can hold, or whether their breakdown will lead to the formation of new swing lows. Amid the uncertain market environment, shares in the more defensive healthcare sector have once again gained prominence, while rising oil prices have also supported the performance of energy companies. A particularly favorable, trend-confirming chart pattern has emerged in the stock of Galp, Portugal’s largest integrated energy company, while the share price of Germany’s Fresenius Medical Care is increasingly showing signs of a potential trend reversal.
Best rated European stocks based on momentum ranking
Compelling technical picture:
Galp (daily): A classic trend-confirmation pattern has formed, from which the stock broke out to the upside with a gap one week ago. As a result, the 18.75 level appears to be an appropriate place for risk management initially. Based on the projected price target derived from this trend-confirmation, prices above 25 also seem attainable.
Fresenius Medical (daily): The long-term downtrend has been broken, generating a reversal signal on the chart. The stock has already completed a successful retest of the breakout level, and the formation of a new swing high confirms that it is now in a bullish trend, increasing the likelihood of further upside. Risk management can be based on a break below the thick green trendline. The price target may reach the 50–53 range.
List of stocks with a chance of a turnaround in the coming weeks
Most popular European stocks
The momentum model supports the creation of a technical based stock list that helps to find shorter-term trading opportunities. The model can be used to identify stocks that show reversal signals following more sustained falls/underperformance. We examine one-year, six-month, three-month, one-month and five-day momentum values, which are used to rank the stocks under consideration. The higher a stock is ranked in the order, the better it technically performs relative to the others. The change in the ranking over time is used to determine the life cycle of the stock.
- In the first table, we collect the stocks that show the most attractive picture compared to the others in a given week based on momentum factors, of which those are also presented in a separate chart where a favourable situation can be identified based on additional technical analysis tools.
- In the second table, we list the stocks that are already worthy of being placed in watchlist status. They are not among the best performers, but they have the potential to improve and signal a turnaround in a few days or weeks.
- In the third table, we have also collected the more popular stocks to help identify their position in the momentum order.
The report shows the results of a technical - quantitative based stock screening, which does not examine the fundamental background/value of the companies. For this reason, risk management/position sizing rules should be designed accordingly.
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