Novo Nordisk A/S (NYSE:NVO) is seeing its stock spiral downwards, with shares plummeting 20% early Friday following the release of Phase 3 trial data.

While the headlines point to a new trial result that failed to meet expectations, the technical analysis reveals a deeper, more concerning picture of the stock's momentum.

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NVO Stock Has Bearish Signals Across The Board

NVO's charts are filled with clear signs of weakness, and the technicals are currently dominated by bearish trends.

Here's a breakdown of what the indicators are signaling:

• Exponential Moving Averages (EMAs): NVO stock is trading below its five, 20, and 50-day EMAs, marking a distinct downtrend. A sustained move below these averages generally indicates a lack of bullish momentum and suggests further downside potential in the near term.
• Simple Moving Averages (SMAs): Novo Nordisk's stock price of $82.70 is significantly below its eight-day simple moving average (SMA) of $104.43, 20-day SMA of $106.54 and 50-day SMA of $109.23. With all these moving averages acting as resistance levels, the bearish sentiment remains entrenched. Furthermore, the price is well below the 200-day SMA of $126.23, reinforcing the ongoing downtrend.
• MACD (Moving Average Convergence Divergence): The MACD reading of a negative 2.68 is a clear sign of negative momentum. A negative MACD indicates that the short-term moving averages are below the long-term averages, further validating the lack of bullish pressure and signaling that the stock could remain under selling pressure.
• RSI (Relative Strength Index): NVO's RSI is currently at 18.58, a deeply oversold level. While this could suggest that the stock is due for a short-term bounce, it also points to how overextended NVO stock has become to the downside. Historically, an RSI this low can signal that a reversal is due, but with the broader trend still bearish, any bounce might be short-lived and met with renewed selling.

For now, NVO stock is in a strong technical downtrend, with little immediate indication that it will break free from the selling pressure.

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