Looking at the technical picture of the Henkel AG & Co KGaA Preference Shares (ETR: HEN3), we notice that from mid-March the stock has been forming higher lows. That said, HEN3 is currently struggling to overcome its key resistance area between the 87.26 and 87.90 levels, which mark the highs of August 5th and July 21st respectively. Although the stock is still trading above its medium-term upside support line drawn from the low of May 14th, we would prefer to wait for a violation of the above-mentioned resistance area first. Hence our cautiously bullish approach for now.
A strong move higher and a break of the 87.90 barrier, which is July’s highest point, would confirm a forthcoming higher high and may clear the path towards higher levels. We might then consider a move to the next potential resistance area between the 91.02 and 91.64 levels, marked by the high of February 24th and the lows of February 3rd, 17th and 18th respectively. The share price could stall there for a bit, but if there is still enough of new buyers, they might help lift HEN3 further north, potentially targeting the 93.80 barrier, marked by the high of February 19th.
Despite the RSI being above 50, it is currently flat. The MACD is also a bit flat at the moment, but it has recently shifted fractionally above zero and its trigger line. Such a picture, in a way, supports the idea of waiting for a break above the 87.90 barrier first, before examining higher areas.
Alternatively, if the aforementioned upside line breaks and the price falls below the current lowest point of August, at 82.44, that may temporarily spook new investors from entering, as such a move may increase the chances for HEN3 to move a bit lower. The stock could end up sliding to the 78.82 obstacle, a break of which might set the stage for a drop to some lower areas. That’s when we will examine a possible test of the 76.06 zone, or the 75.32 level, marked by the lows of May 22nd and 14th respectively.
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