Medium term
Trade view / 05 September 2016 at 7:44 GMT

Swedish steel firm SSAB ready to charge

Instrument: SSAB_A:xome
Price target:
Market price:

Swedish steel company SSAB (SSAB_A:xome) has been one poor investment in the long term, but the tides may have turned.

As with a good chunk of other stocks, often related to miners and industrials, SSAB made a low in January and then a rise and peak into April 25 following what appears to be a five-wave affair higher. 

The retrace and correction of that swing higher was quite deep before a new and higher low was in place. We are currently within the third swing higher off the January lows.

Looking at price levels we have an interesting relation concerning the low in January and the April peak, SEK 17 and SEK 37 (a level almost reached) stand in a 360 degree relation indicating an end of a cycle. 

Currently SSAB_A:xome has found support at the SEK 25 level which is at 180 degrees to the aforementioned levels. As long as the SEK 25 level can hold, the price should be able to push higher to SEK 28 and also the SEK 31 level.

Looking at the oscillators we can see that the Slow Stochastic Indicator is trying to perform a bullish cross and that the Relative Strength Indicator has turned higher. The 50-day moving average is pointing higher and is about to cross the 200-day moving average from beneath. 

However, the most interesting feature is that the Bollinger Bands® are about as contracted as they are ever going to get. We are expecting volatility to pick up!

Management and risk description

This stock is a buy above SEK 25, with targets of SEK 28 and SEK 31. The stop could initially be a daily close below SEK 25.

The main risk to trading this stock is that is it quite volatile, so one should size positions accordingly.


Entry: buy above SEK 25.

Stop: daily close below SEK 25.

Target: SEK 28 and SEK 31.

Time horizon: one or two weeks.

Daily chart SSAB_A:xome:
SSAB_A:xome daily chart

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Source: Saxo Bank 

Daily development chart SSAB_A:xome:
SSAB_A:xome daily development chart
Source: Saxo Bank  

— Edited by Michael McKenna

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Non-independent investment research disclaimer applies. Read more
Michael Liu Michael Liu
Hi Johan, Is this stock still a "Buy"??
Johan Berntorp Johan Berntorp
Above 25.20 yes, if one like a more cautious approach one could await a break above 27.20 from where we are now.
Johan Berntorp Johan Berntorp
Kind of disturbing price action...a daily close below SEK 25 would signal SEK 23 and then if that level is breached SEK 21. Since I seriously doubt this stock is going to make new lows any time soon I still think this stock is longer term bullish and if stopped out here will still be looking to get long on future bullish signals. However the trade isn't over until it is, so sticking with the outlined stop.


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