Following its larger peak back in 2015, Swedish healthcare company SOBI (SOBIV:xome) has failed to break support in a convincing manner and appears to be trading in a range between the SEK 96 and the SEK 145 levels. It is currently trading in the lower end of the range.
Looking at the wave structure in SOBI the main hypothesis until the range break is that we are in a consolidation pattern/correction of a larger scale. The cycle currently being corrected is the more then three-year bull market that started in late 2011 with the peak in 2015. So far we have a wave A, making its low in February this year, from then on we are working on a wave B higher. The current positioning is that of a wave b before a wave c higher within the larger scale wave B.
Looking at price levels we have an important Gann pivot at SEK 101. We also have short-term resistance at SEK 102.50. We would like to see a break above these levels before entry. If so resistance from then is found at SEK 106, SEK 111, SEK 116 and SEK 121.
Key support below SEK 101 is located at SEK 96.
Time cycles are telling us that a larger low, counting from the peak in 2015 isn't in place. We however have a confluence of shorter term cycles between August 22 and August 26 that could be of interest possibly being able to push this stock higher.
Looking at the oscillators we can see how they are challenging their most recent down trend and a push higher at this juncture would break the falling trend increasing odds of a reversal higher.
Management and risk description
The plan is to buy the stock of SOBIV:xome upon a break above SEK 102.50. The stop could then be placed at SEK 98 for a move higher into SEK 106, SEK 111, SEK 116 and ultimately SEK 121.
Once the SEK 111 level has been reached one could go higher, making the stop to entry and consider taking partial profits. Ideally, once this has happened the SEK 106 level should work as support.
The main risk to this setup is broader stock market weakness.
Entry: buy a break above SEK 102.50.
Stop: SEK 98.
Target: SEK 106, SEK 111, SEK 116 and SEK 121.
Time horizon: 1 to 6 weeks depending on target.
SOBIV:xome daily chart
SOBIV:xome daily development chart
Source: Saxo Trader. Create your own charts with SaxoTrader; click here to learn more
– Edited by Gayle Bryant
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