Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 02 July 2015 at 14:48 GMT

Japan's Softbank approaches technical crossroad

Technical Analyst / Saxo Bank
  • Softbank starting to develop a descending triangle pattern in weekly charts
  • RSI sentiment bullish and could see stock to 10,000 on eventual break
  • Bearish run could take Japanese bank back to 5-5,500 area

A Softbank worker tries to drum up business for a stock that could fly. Source: iStock

By Kim Cramer-Larsson

Earlier today our head of Asia macro strategy Kay Van Petersen had a look at Japan's Softbank from a tactical point of view in this video for our Essential Trades Q3 publication

But how does the Softbank stock look from a technical point of view?

Looking at a daily chart it jut looks like it is whipsawing a lot. It may be forming what could look like a symmetrical triangle but it is not of very good quality. 

Despite that, it is still worth to keeping an eye on the two trend lines for medium- to long-term trends.

Softbank daily
Whipsawing Softbank might be tentatively forming a symmetrical triangle. Source: Saxo Bank

Descending triangles

Looking at a weekly chart we can more clearly see a descending triangle pattern. RSI is in bullish sentiment and there is no divergence on the peak in 2013. 

The first warning of the break-out direction could be seen on the RSI with a break of the falling trendline or of the 40 threshold. If it does indeed break out bullish, expect to see new highs in the 10,000 region. 

A bearish break out  will most likely see Softbank down to the 5,000-5,500 level before there is some support. 

However, some patience is needed as I do not expect a break out before later in Q3. It is a pattern formed over 1½ years and a breakout is usually around 2/3 of the way to the apex but it could easily go 80% of the way before we see a break out. 

The later the breakout, the more powerful it is. 

Softbank weekly
A descending triangle pattern may offer a bullish run to 10,000, eventually. Source: Saxo Bank

— Edited by Martin O'Rourke

Kim Cramer-Larsson is a technical analyst at Saxo Bank

Kay Van-Petersen Kay Van-Petersen
Great charts Kim!


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