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Why did Toshiba shares crash? Bearish technical outlook

Amandeep Sonewane | Jan. 20, 2017
Why did Toshiba shares crash? Bearish technical outlook

Why did Toshiba shares crash 16% on reports that the embattled Japanese conglomerate faces bigger losses at its US nuclear power business?

20 January, AtoZForex – Toshiba shares crash 16 percent from 272.3 points and closed at 242.3 points. Though the stock surged 1.82 percent to 246.7 points on Friday closing session but my technical outlook is still bearish for the stock. Are the losses at US nuclear power business is the only reason behind Toshiba shares crash?

toshiba

Why did Toshiba shares crash?

It is dreaded that Toshiba corporation may have to write down the value of the unit by a larger than anticipated 700bn yen ($6.1bn; £5bn). There are unofficial reports that Toshiba is seeking aid from the government Development Bank of Japan. Toshiba said the exact figures was not confirmed and failed to comment on DBJ approach. Toshiba is facing huge cost overruns on projects held by a new company that builds US nuclear power plants. Toshiba's US operation Westinghouse invested about $229m in 2015 for Stone & Webster.

Also, Hiroshige Seko, minister for economy, trade and industry quoted that:

''The rescue plan for embattled conglomerate Toshiba Corp was not under consideration at his ministry. Also, he would closely monitor the steps taken by Toshiba's management.''

asian market Asia shares mixed as Wall St bull run stumbles over profit-taking. Nikkei hit by firmer yen, Toshiba stock crash. (click to zoom)

Toshiba corp. Technical analysis

The Toshiba share price closes below its weekly S3 support level of 251.8 points thus the share is highly bearish in coming months. Furthermore, The simple moving average for a period of MA200, MA100, MA50 and MA20 is 394.5, 330.8, 292.7 and 362.1 respectively. All the moving average gives ‘SELL’ signal. Furthermore, the Fibonacci support and resistance levels are S3 251.8, S2 266.9, S1 277.0  and R1 302.2, R2 317.3, R3 327.4. All the indicators display ‘SELL’ signal and the stock is highly bearish.

toshiba technicals

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Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ Markets.com, nor should they be attributed to AtoZMarkets.