Stock of the day: Unilever

Unilever is fighting a decisive battle right now. But before we describe it in greater detail, we will talk a bit about our previous piece about this instrument. On July 5, we published an analysis that concluded with a bullish statement:

“The comeback above the green area is a thing, which sorts out the sentiment here. The whole drop in 2022 can be considered a false breakout. False breakouts usually lead to a strong signal in the opposite direction, so in this case to the north. In addition, three weeks ago, the price managed to break the long-term downtrend line (black), which serves as a confirmation of a positive sentiment.”

It was a great call as the price climbed higher almost immediately, reaching a local top on July 27 and later on December 7. Since the second top was reached, we have had a small correction shaped like a flag (blue). Unilever is currently in a crucial place as the price trades slightly above the up-trendline (red) and bounces off the lower line of the flag. The bounce is carried out with a hammer candle (green), which increases the chances for a bullish success.

How to trade this setup? Well, a price rising and breaking the upper line of the flag will be a proper signal to buy and a price breaking the red up trendline will be a signal to go short. Currently, the first option seems slightly more probable.