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Technical Update - Luxury goods in decline: Richemont, Burberry and LVMH. Can they find solid ground?
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Richemont CFR closed yesterday below key support at 137.45 which means is has established a downtrend.
However, the strength indicator RSI is still above 40 threshold i.e., still showing positive sentiment. A close below 40 will confirm the downtrend in Richemont. A downtrend that is likely to take the share price down to support around 131.75- possibly all the way down to around 125.
Medium-term – weekly chart Richemont have formed what could be a Double top pattern. IT will be confirmed by a close below the Valley i.e., a close below 125.45. If that scenario plays out Richemont could drop to 110-100 level
To reverse to an uptrend a daily close above 143.10 is required. If that occurs Richemont could test previous peak around 151
Burberry has experienced a steady decline for more than a year by now. And the downtrend doesn’t seem to have ended just yet.
We need to examine a monthly chart and go all the way back to 2007 to find current price levels. Burberry is currently below upper level of the consolidation area from back then meaning if closing below, it could drop to 603 level before finding more solid ground
For Burberry to establish a new short-term uptrend a daily close above 908.80 is required LVMH has been in a bearish trend since the top and reversal pattern formed in March. Forming a falling channel pattern LVMH has reached the support at around 685.30. A daily close below is likely extending the downtrend to January lows around 655-644
Medium-term the downtrend is intact with no support until around 655-644. If closing below 644 further selling pressure will be in the cards with potential down to around 600
The strength indicator RSI is on daily chart rising indicating that the selling pressure is exhaustion.
A daily close above 729 is likely to establish a short-term uptrend but to demolish the medium-term down trend a close above 742 is required.
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