Endesa SA Stock Is Pushing Above Key Resistance | Technical Analysis
Endesa SA (BME: ELE) is one of the three major electricity providers in Spain and is mostly owned by the Italian utility company the Enel Group. Endesa has around 10 mln customers on the Pyrenean peninsula. Utility companies recently started picking up buying interest from investors, as the situation with the coronavirus became worse once again in Europe. Measures across EU states are getting tighter again and some employees are forced to return to their previous environment of working from home. This works well for some major utility companies, given that more electricity will once be used by many households during working hours. In addition to that, the cooler temperatures are on the way, meaning more homes will have to be heated. Another positive for the ELE is that the company is seen paying out its dividends quite regularly and in combination with a rising stock, this might be an attractive option for some investors.
Looking at the technical picture of the Endesa SA stock on our daily chart, we can see that the price had jumped above one of its key resistance barriers, at 23.90, marked near the highs of August 25th, September 3rd and 15th. The move only happened today and if the stock is able to close above that area, this might attract even more buyers into the game. We will take a positive approach, at least for now.
If the share price continues to balance above that 23.90 hurdle, that could be a signal for more investors to join, as such a move would confirm a forthcoming higher high, potentially opening the way towards higher areas. ELE could then drift to the 24.87 territory, marked by the highest point of July, where the stock might get held for a while. This may also result in a small correction lower, however, if ELE stays above the previously-discussed 24.87 zone, the buyers might jump back into action and lift the share price up. If this time it is able to overcome the 24.87 barrier, such a move could set the stage for a test of the 25.72 obstacle, or even the 26.25 level, marked by the current highest point of this year.
Both, the RSI and the MACD are pointing higher, at the moment. Also, the RSI is above 50 and the MACD is above zero and its trigger line. The oscillators are currently showing rising upside speed, which seems in line the above-discussed scenario.
On the other hand, if the share price breaks the medium-term tentative upside line and the falls below the 22.84 area, marked by the current lowest point of October, that would also place the stock below the 200-day EMA. Such a move may spook new buyers from entering any time soon and increase ELE’s chances of drifting further south. The share price might then drift towards the lowest point of September, at 22.25, a break of which would confirm a forthcoming lower low and clear the way to the 21.57 zone, which is the low of June 29th. ELE could get a temporary hold-up there, but if there are still no new takers of the stock at that price, a further decline may bring the share price to the 20.81 level, marked by the lowest point of June, at 20.81.
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