resistance test rejects prices, merger hypothesis uninspiring

To push purchases in the first part of the session were the rumors related to one possible merger with Subsea 7, which would create a colossus in the oil sector (to learn more). Beyond that, the company has achieved new contracts for 880 million dollars.

Saipem, daily chart. Source: Bloomberg

In the past few days, prices had held back sales by bouncing on trendline that unites the lows of June 3 to those of August 16, 2019. From that moment, the buyers were able to continue in their advance, overcoming the obstacle provided by the resistance to 4,214 euros and, subsequently, carrying out the breaking of the 200 day simple moving average.

The holding of the bullish phase is now put to the test: in fact, the daily chart shows how the prices started to retrace in a decisive manner after the trend line surgical test obtained by linking the maximums of 2 October 2018 to those of 5 April 2019, which on other occasions had already initiated important descending phases.

Furthermore, with the post-opening rebates, the false breakout of the concentration level of the offer at 4,488 euros.

Until it comes violated the descending trendline mentioned earlier it does not seem advisable to venture into long-term strategies. If, however, this happens, the series of decreasing highs would be concluded and the impulse target could extend up to € 5, where the dynamic level drawn with the minimums of March 25 and those of April 18, 2019.

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If transactions of a long nature are currently difficult to apply, the short may already be too late, given the strong descent implemented by today's tops.

In this sense, we could exploit a possible reabsorption towards 4.50 euros to try to implement bearish strategies with a particularly conservative stop loss, at 4.63 euros. The main objective of this type of operation would be identifiable at 4.40 euros, while the final one at 4.35 euros.