Stock of the day: ENEL

By Tomasz Wisniewski|

Published: April 21 2023, 10:11 GMT+0

Stock of the day: ENEL

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In today’s analysis, we will be looking at ENEL, the Italian energy company, which is currently facing a crucial horizontal resistance. While a breakout to the upside could signal a long-term buy opportunity, it is still too early to confirm this possibility.

In the long-term, ENEL has been recovering from a downtrend that theoretically ended in November when the price broke the long-term downtrend line (green). However, the recovery has not been particularly encouraging, as it is shaped like a wedge formation (black lines), indicating a potential for further decline. Last week, the price also bounced off the upper line of the wedge and the 38.2% Fibonacci, making it difficult to confirm a full buy signal at this point.

So, how can we trade this situation? The key focus should be on the wedge formation. A price break below the lower line of this pattern would be a signal to go short, while a break above the upper line would signal strength and provide a clear buy signal.

In summary, ENEL is currently facing an important horizontal resistance, and while a breakout to the upside could provide a long-term buy signal, caution is advised due to the wedge formation and recent bounce off the upper line. By monitoring the wedge formation, traders can identify potential trading opportunities by going short on a break below the lower line or going long on a break above the upper line.

Source: https://www.axiory.com/analytics/stock-of-the-day/stock-of-the-day-enel

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