According to analysts at HSBC Holdings, European automotive shares might fall 29% this year, if a five-year trend line isn’t broken.
Murray Gunn, head of technical analysis at HSBC in London, said that since the beginning of the year the price chart for the Stoxx 600 Automobiles & Parts Index has created a pattern called a rising wedge, in which higher peaks and higher lows are converging. This pattern indicates that the gauge of automakers will not succeed in surpassing a trend line which connects its intraday peak at the end of 2007 with the highest level reached in 2011.
“There is a strong resistance zone between 370 and 386,” Gunn said. “A failure at this resistance zone, confirmed with a break below 352, would be bearish and target the June 2012 low of 261 in the first instance.”
Yesterday, January 22nd, the Stoxx 600 Automobiles & Parts dropped 0.4% to 365.1 in London. After the European Central Bank presented its plans to purchase the bonds of the most indebted member states in the euro area, the gauge increased 36% in 2012.
by Ana Cezara Savin
) - Wednesday, January 23rd, 2013 - filed under News
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