The stock of the Spanish meat casing producer, Viscofan SA (BME: VIS), is slowly coiling up, while trading between two of its lines, a short-term downside one drawn from the high of June 1st and a short-term upside one taken from the low of May 27th. Given that there is no clarity with regards to the next possible directional move, we will take a neutral stance for now and wait at least for a violation of one of those lines, before examining a potential move in either of the directions.
A break of the aforementioned upside line and a price-drop below the 57.30 zone, marked by lows of June 25th and July 1st, could spook new investors from entering. VIS might then travel to the 56.10 obstacle, or even the 55.65 hurdle, marked by the lowest point of June. Initially, the stock could stall around there for a bit, however, if there are still no takers of VIS at that price, it may slide again, possibly targeting the high of April 24th, at 54.85, as the next potential support area.
Looking at the RSI and the MACD on our 4-hour chart, the two indicators are providing slightly mixed signals, which may come in-line with the above-mentioned idea. The RSI is just a bit below 50, which suggests slight negative price momentum. But the MACD, is fractionally above zero and its trigger line, which could keep investors slightly interested. That said, as long as both oscillators are going to contradict each other, we will stay neutral.
On the upside, a break above the previously-discussed downside line and a price-rise above the 59.10 barrier, marked by yesterday’s high, might open the way to some larger extensions to the upside. The stock may then drift to the 59.75 obstacle, a break of which could allow VIS to test the 60.30 zone, which is the highest point of June. However, even if that zone is not able to withstand the buying activity, its break could clear the path to the 62.15 level, marked by an intraday swing high of May 12th.
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