Technical Analyst, Saxo Bank Group
Summary: Novo may have topped out and could be facing a larger correction. Top and reversal patterns are in place but downtrend/correction not yet confirmed.
Novo Nordisk reported earnings this morning and the reception has been market indecision resulting in quite a lot of volatility.
Short-term: Novo formed a Bearish Engulfing candle 9th January which is an indication of a top and reversal. Market gapped lower the following day. However, the gap has been closed but the Bearish Engulfing top and reversal indication remains. It would need at close above 975 to be cancelled and reversed.
If Novo is hit by selling pressure and closes below 896.50 it is technically in a bearish trend. The lower gap from November will be a strong support area.
Daily RSI is still showing positive sentiment with no divergence indicating a push higher in Novo.
An RSI close above its falling trendline could be first indication of this scenario to play out. If RSI closes below 40 its in negative sentiment.
Medium- and longer-term: Novo has formed a Bearish Engulfing candle a couple weeks ago after hitting the upper band in the rising channel. There has been RSI and Volume divergence during the entire uptrend from Q4 2021 i.e., the Strength Indicator and traded volume have been declining while the share price has been rising. That is a warning sign of a trend weakening.
If weekly RSI closes below its lower rising trend line it is indication of Nove could drop to test the lower rising trendline in the rising channel.
Monthly chart shows almost similar pattern as the weekly chart. Rising channel and declining RSI and Volume meaning divergence. The uptrend in price is weakening. Divergence on RSI cannot go on forever.
For these price exhaustion patterns to be cancelled and reverse a close above 976.30 is needed following new higher RSI value.
If Novo is failing to close above 976.30 and instead slides lower it could test the lower rising trendline. A break of the trendline the key support at around 730.60 could be tested.
Next couple of weeks could be decisive for the medium-to longer-term trend.
RSI divergence explained: When instrument price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Head of Fixed Income Strategy
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Head of Commodity Strategy
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Head of Fixed Income Strategy
Quarterly Outlook
Head of Commodity Strategy
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)