Navigation aid

DES - Online Annual Report 2007

History:

Chart analysis

My Annual Report

Store page
My Annual Report

Chart analysis

Bodo Hoffmann, former assistant to the renowned “chart doctor”, Dr. Hans-Dieter Schulz, and current chief executive of IT Future AG, analyses Deutsche EuroShop’s share price chart.

Deutsche EuroShop’s shares have displayed an extended upward movement since October 2002, which was last tested by the year’s low in January 2008. Since 2004, a somewhat steeper upward trend had formed within this extended movement, in which the shares rose at the start of 2007 to what at the time had been a record high of €60. In 2007, the shares tested the €60 level several times but were unable to breach it. Following the share split, this mark now poses a line of resistance at €30 due to the “magic of round numbers” and represents a considerable upward hurdle.



6-month target:
30 €

Short-term stop-loss:
25 €

Massive support line:
22 €

The upward trend which existed since 2004 was breached downwards in mid-2007, and the shares subsequently breached the zone between €28 and €26 fairly quickly, driven by the negative overall market. It prompted a downward movement within a trend channel which existed since May 2007 and was confirmed and defined by various brief upward and downward movements.

The moving average for the last 200 trading days is located at the upper edge of the downward channel which could not be breached in October/November 2007 and from which the shares were adjusted until January 2008 up to the upward trend which had existed since 2002. This level was at approximately €22 and forms a massive support line. Since January 2008, the shares are once again in a steeper upward channel in which it succeeded, as just a few days ago, to breach the downward-pointing channel which had existed since 2007 in an upward direction. If this should not be a bull trap, and the price does not return to the downward-pointed trend in the next few days, the upper limit at €26.50 currently represents a support line. If the shares now remain in the short-term upward channel, its next short-range target should be €28, where the next serious line of resistance stands. A breach of €28 opens the path to €30, whereby the line of resistance at around €29 plays a weaker role. Upon a climb to €30, these represent a massive line of resistance, owing to the multiple tests of 2007 and the fact that this level has never been breached successfully. Only when the shares reach about €31 can we assume a breach of the line of resistance and its reversal into a support line as well as aim for levels around €33.



6-month target:
30 €

Short-term stop-loss:
25 €

Massive support line:
22 €

If the shares should choose not to overcome the downward trend and depart downward from the short-term upwardpointed trend channel, the averages of the last 200 and 100 trading days at around €25.50 serve as a support. If this region as well should be breached downwards, a retreat beyond €24 to approximately €22 is possible. However, since the upward trend, which has existed since 2002, is also situated at this point, this mark represents a massive support line from today‘s point of view and should not be breached easily.

In light of the shares’ positive development in the overall market, a level of €30 should certainly be considered as its target price. Even if, from today’s vantage point, the risk downwards to a zone around €25 is limited, €22 could turn up once again, posing the trend of 2002. However, as soon as the market is able to calm itself, the shares should head for an all-time high and the €30 level. However, this necessitates that the overall market does not come under further pressure and that the positive figures recently announced by Deutsche Euro- Shop are recognised by shareholders once again. Namely, despite technical chart analysis, stock market prices only rise if demand exceeds the supply.



Continue reading: Roadshows and conferences

Back to: Stockmarket 2007