The Stoxx Europe 600 Telecommunications (SXKR) had resisted up to now on the lows it marked in May and June, forming from there two rebounds that invited some optimism, which finally ended in borage water last week after seeing those minimums ceded and support in the area of 665/670 points.
that the telecoms European companies are suffering is something that cannot surprise anyone either, since this type of company is exposed to risks due to high inflation, every time intense competition makes it difficult to transfer price increases to final customer ratesalthough it is true that the operators in the United Kingdom, where the highest increase in inflation is expected, the contracts of the clients include clauses that allow annual revisions to be made due to the increase in inflation, something that does not occur in Spain and Italy as they have a more difficult position in terms of pricing power, which hurts Telecom Italia and Telefónica.
Inflation can also affect many areas of investment, such as those linked to the installation of large optimal fiber networks, in this case being the most affected Vodafone, KPN and Telecom Italia.
Given this scenario, I am going to review for you the evolution of the main European telecoms, without forgetting the British, BT Group and Vodafone. We are going to see at what levels it would be attractive to place purchase orders and in the event that they have them in their portfolio I am going to point out the risk that they may have in the coming weeks if finally the Stoxx Europe 600 Telecommunications (SXKR) ends up going to look for, as suggested by the loss of supports that I indicated before, the low zone of the year that they established in March. Until then there is a margin of fall of 7%, something that is not turkey mucus in this type of company that many consider for its defensive role and dividends.
At the beginning of August I already told you that the loss of support presented by the price of Telefónica at 4.35 euros was anything but somewhat bullish in the short term for the Spanish operator. At that moment I understood that the maximum risk of a fall was to see a drop to the area of 3.90-4 euroswhere there is significant psychological support and there is the 38.20% Fibonacci proportional correction level of the entire bullish movement that led to Telefónica from the 2.28 to the 5 euro zonefrom October 2020 to July this 2022.
Last week it reached that support and given the behavior of the SXKR sector, which has given up support, I am afraid that Telefónica could continue to deepen its fall and I would not be surprised if before trying to resume its upward trend it could go to seek support in the area of the €3.50-3.60, which are the minimums of the year that it marked in March and that, furthermore, its scope would mean having corrected half of the entire previous rise that I described before. Until then, I would not place purchase orders if they are interested in buying Telefónica.
The German telecommunications operator Deutsche Telekom has been defining an impeccable upward trend over the last few years that has served to recover 50% of the entire downward trend that was born in the high 2000s around 35.50 euros, after reach the area of 20 euros in the short term. Today it is the operator that presented the greatest strength, but in the short term I do not like the possible upward failure that it has had after trying to consolidate on the resistance of 19.50 euros. If he loses the 18.50 euros I am afraid that he could enter a correction phase of a higher order and in this case, it would be possible to expect a drop to 17.50 euros, which is what I suggest you wait for if you want to buy. If they are inside at least reduce if you lose the 18.50 euros. As soon as a possible consolidation concludes, I continue to think and favor that in the coming months it is most likely that the title will go looking for the zone of €23.50-€25the range of which would imply a recovery of 61.80/66% of the entire fall from the highs of 2000.
The French operator Orange is a title that could be a very interesting purchase option if the falls deepen towards the area of old resistance, now support, of 9.50 euros, whose break confirmed at the beginning of the year a broad pattern of reversal to rise, whose minimum rise objective is located at 12.50 euros, which are the highs of 2019. With stop under 8.50 euros you can buy Orange if you cut back to 9.50 euros. There you can place your buy orders and a return to that level would fit with the SXKR going to the lows of the year.
The British telecommunications company Vodafone is one of the companies that, in my opinion, is the most attractive to take positions, being the optimal point to do so the zone of 100 pence. A drop there could fit what would be the right shoulder of a potential inverted head and shoulders upturn pattern, which it would be confirmed if in the coming months the price manages to beat resistance of 137-140 pence, which is the clavicle of that reversal pattern and a horizontal resistance that stopped the rises in 2019 and last February. overcoming the 137everything would indicate that in the coming months Vodafone would go to look for targets in the area of the 175 pencewhich are their all-time highs for 2018.
BT has been consolidating for months within a price range that has 200 pence as resistance and ceiling and 200 pence as base and support. 130 pence. I tell you this to the extent that the price is approaching that support, where you could put a foot in the British operator in search of going back to 200 from there. 117 pence sell to avoid a drop to 2020 lows in the 92.