Navigation aid

Deutsche EuroShop - Annual Report 2006


Chart analysis

Bodo Hoffmann, a former assistant to Dr. Hans-Dieter Schulz, the famous ”Chart Doctor”, and Chief Executive of IT Future AG, analyses Deutsche EuroShop’s share price chart.

In the period between mid-2004 and April 2006, Deutsche EuroShop

shares rose within an upward trend channel, rising from € 32.90 to approximately € 55. In the second half of 2006, the share price then consolidated within this upward channel in a zone between € 52.50 and approximately € 55.50, which represents a massive support line. The triangle shown depicts a temporary interruption to the upward trend within the intact upward trend channel and confirms the consolidation. In other words, the stock was simply taking a healthy breather.

Chart analysis 1

In mid-December 2006 the shares successfully broke through the upper edge of this formation after testing the lower boundary of the 2004 trend channel, resulting in a price target of approximately € 60. This was reached relatively quickly in February 2007, with the all-time high of € 60.11. However, the share was unable to continue at the € 60 level; this was tested but not breached a number of times in the past weeks and thus represents a resistance line.

Despite the recent market turbulence, the share is currently in the upward channel it has been in since December, the lower support line for which is approximately € 57. This also roughly corresponds to the current moving average for the last 100 trading days; as a result, it can be assumed that this line cannot easily be breached. If this nevertheless happens, the moving average for the last 200 trading days together with the lower limit of the upward trend channel that has been in existence since 2004 at approximately € 55.40 and the zone between € 55.50 and € 52.50 form a massive support line. This bulwark in chart analysis terms will not be easy to breach.

Chart analysis 2

On the upside, the shares are currently bounded by the € 60 mark. If they can break through this barrier and reach new alltime records, there are no further resistance lines; in this case, the next targets should be € 65, followed by € 70.

If one takes other indicators such as the MACD (moving average convergence/ divergence indicator) and the RSI (relative strength index) into account, these suggest that the shares will rise, making them a good investment in the near future.

Chart analysis 3

Short-term target: € 63.80
Short-term stop-loss: € 55.29

Bodo Hoffmann

Continue reading: Advantages and disadvantages of REITs

Back to: Stock market