Medium term
Trade view / 29 September 2015 at 4:34 GMT

Astra Zeneca shows medium-term vulnerability

Instrument: AZN:xome
Price target:
Market price:
Background

Astra Zeneca (AZN:xome) listed on the Swedish stock exchange has been relatively strong during the most recent market turmoil but could be in for a medium-term setback.

As with many other stocks, the trend appears to be pointing lower as we have a sequence of lower highs and lower lows longer term. In the medium term, this stock has managed to bounce but has encountered trouble at the 200 and 50-day moving averages, which are both moving lower even though the 200-day ever so slightly. 

As of late the relative strength indicator (RSI) has turned lower with the rejection at the 50-day moving average yesterday.

Support is now found at SEK 537, SEK 525 and SEK 510. Resistance is located at the 50-day moving average and the 200-day at SEK 558 and SEK 570 respectively.

Now, a price break below SEK 537 would break the rising trend in the RSI indicator and is likely to move the indicator towards the 30 oversold threshold, which would mean the price in this case is likely to take the same path.

Management and risk description

The plan is to sell AZN:xome short below SEK 537 for a move into support at SEK 525 and SEK 510. Once we reach the first target level, consider taking partial profits and once we break below start to move the stop lower.

The risk to this setup is a quick break below support, which is immediately reversed. Ideally price will stay below support following a break lower.

Parameters

Entry: sell below SEK 537.

Stop: SEK 560.

Target: SEK 525 and SEK 510.

Time horizon: two to three weeks.

AZN:xome daily chart
AZN:xome daily chart
 
AZN.xome daily development chart
AZN:xome daily development chart
 Source: all charts Saxo Bank. Create your own charts with SaxoTrader; click here to learn more. 

— Edited by Gayle Bryant

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Non-independent investment research disclaimer applies. Read more

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