Since mid April the SMI dropped nearly 15% till July and since then it is forming a potential bearish flag (rising channel after a decline). On the one hand you could trade the channel with a well defined stop underneath the trendline or on the other hand you could trade a breakout of the channel to the downside.
The stock with the highest weighting in the SMI is Nestlé. The chart of Nestlé shows a nice breakout in November and now a retest of the former resistance level between 54 and 54.5 CHF. This is a very critical level because it is also the high of 2007. For further upside Nestlé has to hold this level.
The rising triangle would indicate a price target of 60 CHF.
As you can imagine with a weighting of approximately 23% the action in Nestlé is crucial for the SMI.
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