The technical picture of Sodexo SA stock (EPA: SW) shows us that after a strong move higher in the beginning of November, the share price is now coiling up and forming a symmetrical triangle. However, the triangle might be seen as a possible bullish pennant, which tends to break to the upside. Also, another positive indication is that the share price is now comfortably trading above the 200-day EMA. That said, in order to get excited with higher areas, we would prefer to wait for a violation of the upper side of the pennant first and then a push above the 74.94 barrier, marked by the current highest point of November.
If, eventually, we do see a pop above the previously mentioned 74.94 barrier, that will confirm a forthcoming higher high, potentially opening the door for a move to some higher levels. SW could travel to the 77.00 obstacle, a break of which may clear the path for a test of the 80.64 zone, marked by the high of March 10th. The stock might stall there for a bit, but if the buyers are still active, the next possible target could be at the 85.00 level, marked by the low of February 28th and the high of March 5th.
The RSI and the MACD are currently flat on our daily chart. However, the RSI continues to balance above 50 and the MACD, despite coinciding with its trigger line, continues to run well above zero. The two oscillators are still indicating a positive price momentum, but the fact that they are flat, supports the idea above of waiting for break out first.
On the downside, if the stock drops through the lower side of the aforementioned pattern and then slides below the 67.50 zone, marked by the low of November 13th, that could spook new investors from entering any time soon. SW might fall to the 63.84 obstacle, a break of which may clear the path towards the 59.00 level, marked near the lows of September 1st, 21st, 25th and October 22nd.
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