Unilever's Correction Likely Has Further to Go

 | Oct 19, 2017 | 1:48 PM EDT
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We recently wrote about Unilever NV (UN) , and noted that "UN has made a couple shallow corrections in its path higher. My "gut feel" is that the next correction, whenever it comes, will not be shallow." Seeing the price of UN down more than 6% today it represented a good chance to review the charts and indicators.

In this updated daily bar chart of UN, below, we can see that the price of UN gaped below the rising 50-day moving average line. We don't know what the close will be but it looks likely that prices close below their June lows. Breaking the June low opens the way for a retest of the $56-$54 area -- the next likely area of support. Again, the breaking of $54 could open the way to further price weakness.

The On-Balance-Volume (OBV) line has not really turned down but it should soon. The Moving Average Convergence Divergence (MACD) oscillator is weak and could soon cross below the zero line for an outright sell signal.

In this weekly bar chart of UN the selloff today does not appear. Even penciling in today's weakness UN is still above the rising 40-week moving average line. The weekly OBV line is not declining but the MACD oscillator is pointed down.

In this Point and Figure chart of UN, below, we can see that prices have gone nearly straight up with only small consolidation patterns along the way. A decline to $57.49 will help to weak the chart further.

Bottom line: A decline to around $54 or so would be what I would expect. From that area prices might bounce or decline further if support does not materialize.

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