SMI20 1W Chart Analysis, August 28, 2023
Is SMI20 in new uptrend?
Economic background
According to the Thursday publication of the Swiss Federal Statistical Office, GDP growth for 2022 was not 2%, but 2.6%. In addition to these initial estimates for 2022, the GDP figures for 2021 and 2020 have also been revised upward. For 2021, it is now +5.4% after the previously communicated 4.2%. For 2020 -2.1% instead of -2.4%. The annual inflation rate in Switzerland has remained low and under 2% since June.
The combination of low inflation and faster-than-expected GDP growth is usually good for the stock market. The chart illustrates how the trend broke out of the downward channel in early April. It is marked by purple lines and begins in January 2022. The new ascending channel is marked by yellow lines and is confirmed by 4 upper candle shadows and 3 lower shadows.
Technical analysis
Nevertheless, there are some warning signals for continuing the new trend. Those are trading the SMI20 below the EMA50 and EMA9, the death cross on these averages and on the MACD. It should be noted that the EMAs are still relatively close to each other. It can be read as temporary indecision.
On the other hand, the price has already tested the upper limit of the former descending channel twice, bouncing off it each time. SMI20 is currently trading around the Fibo retracement at 0.382 (10,993). For the future movement, how the weekly candle closes should be decisive. A return and close above the EMA9, EMA50 and above the Fibo 0.236 (11,231) level may favor the continuation of the uptrend. In this case, the price usually tends to Fibo 0 (11,615) or the upper limit of the ascending channel. If the candlestick closes below the yellow trendline and Fibo 0.5 (10,802), the target points may be retracements of 0.618 (10,610) and 0.786 (10,337).
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