Trade view /
20 June 2016 at 5:09 GMT
The trend on the OMXS30.I (SWE30.I) is bearish; the index is making lower lows and lower highs and a re-test of the February lows appears to be on the cards. From a short-term perspective the current cycle started on April 20. Within this cycle we are currently tracking a short-term descent off the May 31 low, which is a move that appears to be incomplete.
Last Monday this market managed to print a low at 1269, from this low the market has been tossed back and forth before finding some renewed strength this past Friday. If we are in a down-trend we would expect descents to last longer than the ascents and so far, measuring from the May 31 peak this isn't the case in relation to the preceding bounce and why we are looking for new lows below the low print from June 13.
From an Elliott wave perspective the low set on June 13 completed at best (for the bulls) a wave three and we are currently seeing what should be a wave four before a final wave five lower with the aim possibly set for the February lows.
Resistance pivots are found at 1307, 1315 and 1325. Established price action above 1325 would indicate that the above reasoning is wrong and that something else could be taking place.
Support is found at 1279, 1271, 1261 and 1249.
Management and risk description
This market appears to be heading lower and the strategy is to short the current bounce on stalling price action into the above-mentioned resistance areas. The stop could be placed upon established price action above 1325 and the targets for this setup are 1271, 1261 and 1249.
There are two main risks this week: first of all we have the Brexit vote coming up and secondly the Swedish market is closed for holidays on Friday. One might want to trade in smaller lots than usual due to expected higher volatility this week.
Entry: sell bounce below 1325.
Stop: established price action above 1325.
Target: 1271, 1261 and 1249.
Time horizon: this week.
SWE30.I daily chart
SWE30.I hourly chart
SWE30.I daily development chart
Source: all charts Saxo Bank. Create your own charts with SaxoTrader; click here to learn more
— Edited by Gayle Bryant
For more on equities click here
Non-independent investment research disclaimer applies. Read more