Article / 06 April 2017 at 13:34 GMT

Pandora bubble set to burst

Technical Analyst / Saxo Bank
Denmark
  • Pandora charts point to downtrend across all time horizons
  • Breach of 660 DKK could see stock head far lower
  • Strong top, reversal pattern supported by all indicators

Pandora
Shares of Danish jeweler Pandora are headed for a potentially significant 
downward move. Photo: Shutterstock

By Kim Cramer Larsson

We are seeing a downtrend on all time horizons in Pandora shares, i.e. lower lows and lower highs. Taking a look at the chart, we see a monthly shoulder-head-shoulder pattern with the neckline now broken and support at 767 DKK taken out. The next level of support lies at 705 DKK, but it is not strong.

I am almost reluctant to say how far I believe Pandora could drop if 660 (the minimum SHS patten-derived price target is taken out... but let's say that 534 DKK is one figure that come to mind. 

The 660 DKK area is also close to the 0.382 Fibonacci retracement of the whole bubble; 534 DKK is approximately 50% of it and sits very close to the pre-peak level.

Pre-peak is a major correction we always see in bubble scenarios. When a bubble implodes, the price almost always comes down to the peak of the correction at minimum, but it also often proceeds to the low of the correction from there.
 
Pandora monthly
 Source: Saxo Bank

A closer look at the (complex) shoulder-head-shoulder pattern on the weekly chart shows a broken neckline and a minimum target of 660 DKK (see the horizontal line).

A strong top and reversal pattern is supported by divergence on all indicators.

Pandora weekly
Source: Saxo Bank

Pandora is a bit oversold in the short term but the trend remains down on all time horizons. A bearish break out of the wedge target has been reached. 

We do see some support at 705 DKK, and a bounce could potentially be seen from this area. I do not see a bounce higher than 760-770 DKK as likely even if this proves the case, however. 

Pandora daily
Source: Saxo Bank 

— Edited by Michael McKenna
Kim Cramer Larsson is a technical analyst at Saxo Bank
2y
zombietrader zombietrader
Thank you for the analysis. This morning had a big drop, around -10%! (minimum about 679, not far from the 660 support). it is below SMA 100 days and approaching to the SMA 200 days. Where will it stop? :). Regards from Spain.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail