Stock of the day: E.ON

Not all hope is lost yet, and buyers are still trying to make a proper reversal but to be honest with you, it’s a huge struggle. I guess we can forget about the V shaped reversals that we saw many times before. This time, it seems that the correction will stay with us for longer. If that’s the case let’s look for a decent selling opportunity. I have one, it’s from Stock Exchange in Frankfurt and the company’s name is E.on.

The reason why I want to show you this company now is that the price is currently breaking the crucial horizontal support at 10.7 EUR. It’s not only a local top from July 2020 and May 2021 but it’s also a 23,6% Fibonacci. A breakout of this line, means that the price can drop as deep as to the 38,2% or even deeper to 50% Fibo, which would be in line with the support levels from April, May and June.

One thing can keep the bullish dream alive and that’s the lower line of the flag (orange). In theory, a flag is a bullish pattern here but only the bounce from its lower line wouldn’t be enough. In order to get a proper buy signal, we would have to see the breakout of the 10.7 resistance and the upper line of the flag. So far it is not the case and chances for that are rather slim. As long, as we stay below the grey area, sentiment is positive.