Short term
Trade view / 23 May 2016 at 5:14 GMT

ABB signals further gains into the week


The stock of Swedish listed Power and Automation technology company ABB (ABB:xome) has shown an impressive resilience of late. When the overall market has come down quite a bit from those April highs, this stock has consolidated just below.

The bull run off the January lows has thus far managed to make new highs at April 28. At this point in time, no cycle alignment has been made, signaling there should be more upside still before we can call an end to the current swing higher or suspect that such a peak is in the making.

The next date of importance for this stock would be May 27, this upcoming Friday, when we will have a 360 degree cycle relation with the bear punt off last year's highs into the low set in January.

Short-term resistance is made up by the April 28 price peak at SEK 171 - SEK 172. A daily close above this area would signal further gains into at least May 27 is on its way.

The importance of the current resistance zone is also emphasised by the 180 degree price relation between the June peak last year at SEK 196 and SEK 168.

The next important alignment in price is located at the SEK 186 - SEK 187 area. More traditional technical resistance could be seen at the SEK 176 and the SEK 180 level.

Management and risk description

The plan is to buy ABB upon a close above SEK 172 for a move into overhead resistance at SEK 176 and SEK 180. The stop could initially be placed at SEK 167. 

The OMXS30.I, the broader market, is at an inflection point. If this market closes bullish today, it is positive for this trade view.

If the stock of ABB for some reason goes higher on a thin market we should be a bit weary. With breakout trades the risk is that we get lured into a trade that fails to gain upside momentum and reverse. On such occasions the price is often reversed lower in a relatively violent manner.


Entry: Close above SEK 172.

Stop: SEK 167.

Target: SEK 176 and SEK 180.

Time horizon: This week.

ABB daily chart
ABB:xome daily chart
ABB daily development chart
ABB:xome daily development chart Source: All charts Saxo Bank - create your own charts with SaxoTrader. Click here to learn more

— Edited by Adam Courtenay

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Non-independent investment research disclaimer applies. Read more
25 May
Johan Berntorp Johan Berntorp
This trade has failed to trigger and even though price have gained some it hasn't been enough. Sure the trade might still trigger but it would be too close upon the key cycle date, May 27. Therefore I'll pass on this one to see if the setup could be re-arranged with new time and price targets next week or in a not too distant future.
27 May
Johan Berntorp Johan Berntorp
ABB hit SEK 176 today and if it holds we have something quite interesting going on. The rise off the Jan 21 lows took, so far 127 days on the WC on the Wheel. Price at SEK 176, day high almost exactly is located at the WC as well. Danger ahead!? - the bear swing from June 4 last year until the Jan low took 233 days which is almost at the WC too...


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