MAPFRE: Everything points to new highs!! Pay attention!!
On February 12, Mapfre presented its income statement, beating expectations!!.
Premiums will grow solidly in 2024 (+6.6% at constant exchange rates) to €28,122M, beating expectations. The biggest surprise comes from the margins side. The Non-Life combined ratio stands at 94.4% (vs 97.2% in 2023), despite the fact that pressure on margins persists in the auto segment. It drives the technical result which, together with the financial result, more than offsets the fall in the Life branch result. Overall, the BNA rebounds to €902M (+30%; vs €888M expected).
In short, the results beat our expectations.
--> What does the technical aspect look like?
As you can see in the graph, the TREND and STRENGTH are clearly bullish (Bull) in their main time frames (DAILY and H4), therefore, we will only look for long positions.
--> When is the best way to enter long positions?
Once we have TREND and STRENGTH aligned in DAILY and H4, we go down to H1 or M30 time frame to wait for a pullback and enter in the direction of the H4 trend, in this case, bullish (Bull), therefore we go LONG.
If we look at the graph in H1, the FORCE turned bullish (Bull) on February 25 and it was from that point when the bullish momentum began. Now IT IS MAKING A SMALL PULLBACK which gives us the opportunity to enter long positions if the pullback does not break key support zones.
--> How do you know when a pullback ends?
There are several techniques such as using an indicator, moving average crossovers, Fibonacci retracements... For example, I like the price to retrace at least 50% and wait for the price to break previous highs to enter long.
Another option that is also used a lot is to enter long when it makes a Fibonacci retracement of 50% or 61.8% without waiting for the retracement to end, in this way the entry price is lower, but we have the risk that the retracement does not end and the Stop Loss is triggered.
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Strategy to follow:
ENTRY: We will open 2 long positions if the H1 candle closes above its previous highs at 2.736
POSITION 1 (TP1): We close the first position in the 2.8 (+2.8%) zone
--> Stop Loss at 2.67 (-2.5%).
POSITION 2 (TP2): We open a Trailing Stop type position.
--> Initial dynamic Stop Loss at (-2.5%) (coinciding with the 899 of position 1).
--> We modify the dynamic Stop Loss to (-1%) when the price reaches TP1 (2.8).
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SET UP EXPLANATIONS
*** How do we know which 2 long positions to open? Let's take an example: If we want to invest 2,000 euros in the stock, what we do is divide that amount by 2, and instead of opening 1 position of 2,000, we will open 2 positions of 1,000 each.
*** What is a Trailing Stop? A Trailing Stop allows a trade to continue gaining value when the market price moves in a favorable direction, but automatically closes the trade if the market price suddenly moves in an unfavorable direction by a certain distance. That certain distance is the dynamic Stop Loss.
-->Example: If the dynamic Stop Loss is at -1%, it means that if the price drops by -1%, the position will be closed. If the price rises, the Stop Loss also rises to maintain that -1% in the rises, therefore, the risk is increasingly lower until the position becomes profitable. In this way, very solid and stable price trends can be taken advantage of, maximizing profits.
