The technical picture of the Rheinmetall AG stock (ETR: RHM) on our daily chart shows that, after dipping in the end of October and then reversing sharply to the upside in the beginning of November, the share price is now close to its key resistance area between the 79.50 and 80.30 levels, which mark the highest points of October and November respectively. At the same time, the stock is floating above a short-term upside line drawn from the low of November 13th. In addition to all that, RHM seems to be forming an inverted head-and-shoulders pattern, which tends to be a bullish pattern. However, in order to get excited with the upside, we would prefer to wait for a break above the “neckline” of the above-discussed pattern first. Until then, we will remain somewhat positive.
If, eventually, we do see a strong move through the so-called “neckline”, that will confirm a forthcoming higher high and open the door for a further upmove. The stock may then rise to the 82.22 obstacle, or to the 84.31 zone, marked by the highest points of September and August respectively. If the buying doesn’t stop there, the next potential target might be the highest point of July, at 88.34.
The RSI and the MACD are somewhat flat, at the moment. That said, the RSI remains slightly above 50 and the MACD, although fractionally below its trigger line, continues to run above zero. The two oscillators are indicating that the momentum is still on the positive side, which comes inline with the idea discussed above.
Alternatively, if RHM breaks the aforementioned upside line and then slides below the low of last week, at 73.78, that may spook new buyers from entering any time soon. With that move, the stock could increase its chances of drifting further south, initially aiming for the 69.60 zone and then potentially targeting the 66.12 level, marked by the low of November 6th.
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