From October 15th, 2018, after reversing to the upside, the Iberdrola SA stock (BME: IBE) had been climbing higher, while trading above a medium-term upside support line taken from the low of that day. But after reaching a 10-year high on June 18th, the stock started shifting back down, establishing a new short-term downside resistance line taken from the high of July 3rd. Even though on July 23rd the share price made a false break through that line, today we are seeing IBE opening the trading session below it. Certainly, we have to wait and see if the stock will close below that line today, but such a move could have already made new investors worry about the timing of when to buy the stock. That said, in order to get bearish about the stocks near-term outlook and target some lower levels, we would need to wait for a clear price-drop below the 8.330 hurdle, marked by the lowest point of July. Only then we would get comfortable with further declines, so for now, we will remain neutral.
As mentioned above, a drop below the 8.330 hurdle could open the door for further declines. Such a move may also bring IBE below its 100-day EMA, which might be a worry-sign for new potential buyers, as it may increase the stock’s chances of drifting further south towards the 8.094 area. That area is marked by the low of May 21st. We might see the price stalling near that level, or even correcting back up a bit. But if the share price stays below the aforementioned tentative downside line, we will continue targeting lower levels. That’s when IBE could travel back to the 8.094 obstacle, a break of which would confirm another lower low and the stock could end up testing the 7.876 mark, which is the low of May 9th.
On the upside, if IBE moves back above both of the previously-mentioned lines, the upside and the downside, this could give hope for new investors that the stock may drift higher again. More buyers might join in if the share price rises above the 8.730 barrier, marked by the high of last week. This way we will start considering the next potential resistance zone, at 8.938, which is the low of July 3rd. If that area is not able to stop the uprise, its break could send the stock to the 9.052 hurdle, or even to the 9.124 level, which is IBE’s 10-year high.
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