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This article takes a look at some of the big movers off the back of recent earnings announcements to try and find stocks that seem to provide a good trading opportunity. Typically, earnings announcements will drive a shift in market sentiment, allowing for a long-lasting trend to take hold off the back of the announcement. However, we can also see earnings figures drive a stock into particular reversal points, once again providing us with an opportunity to trade that initial market move based on technicals. As such, the aim is to reflect on the impact of these announcements from a technical perspective rather than a fundamental one. After all, the price is expected to reflect all relevant knowledge currently available.
First up is Aveva, which has seen a sharp decline throughout the week. Much of the decline took place on Tuesday, with its earnings release originally providing a boost for the share price. However, that move was short-lived, with the price subsequently tumbling below a critical level of support. This completes a head and shoulders formation that has been playing out over the past five months.
Crucially, we have seen that 2485 support level respected on a number of occasions. With the break we have seen this week, it makes sense to expect this share to deteriorate sharply from here. With the 200-day simple moving average (SMA) providing resistance to any upside in the second half of the week, it makes sense to look for the share price to continue capping any near-term upside.