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Blog

Technical update: 19 May 2017

Violeta Todorova

Reliance Worldwide (RWC) – approaching resistance

RWC has been trading in a strong up trend since February 2017 which is still technically intact. While at this point there is no reversal signal evident on the chart we note that the price is approaching a band of resistance between $3.47 and $3.55 where selling pressure is likely to arise. The RSI and the MACD indicators have reached overbought territory, suggesting that the stock is vulnerable to a pull back. 

Given the proximity to resistance and the overbought momentum levels, we see the current or any further strength as a good opportunity to trim positions.

ALS (ALQ) – target reached

In our last update on May 8, 2017 we discussed the overbought nature of the stock and the likelihood of the price declining to $5.90 in the short term. The price has pulled back over the past two days and our price target has been reached on Thursday. The RSI indicator is approaching its support, suggesting that the price is likely bounce soon. Therefore, we see the $5.70 - $5.90 range as accumulation territory for active investors.

The potential upside price target is $6.40. Over the medium term, we believe the price will continue to trade sideways and we rate the stock a hold.

Motorcycle Holdings (MTO) – building a base

The decline from the March 2017 high has lost momentum over the past month and the price has been trading sideways, fluctuating between $3.62 and $3.98. A small bullish divergence between the price and the RSI indicator has formed on the daily chart, suggesting that the correction is likely to reverse course soon. A break above minor resistance of $3.98 is highly likely and will trigger a technical buy signal.

The first potential short term upside price target based on the breakout is $4.45. Over the long term, levels above $4.60 are achievable.

Orora (ORA) – accumulate

The long term up trend has lost momentum over the past nine months and the price has been trading sideways, fluctuating between $2.65 and $3.19. The current price action is approaching its band of support between $2.65 and $2.72, where strong buying interest is likely to arise. The RSI indicator is approaching oversold territory, suggesting that the price is likely to bounce soon. Given the proximity to support and oversold momentum levels we are comfortable to start accumulating the stock.

The potential upside price target is $3.05.

Healthscope (HSO) – under selling pressure

The decline from the September 2016 high has lost momentum over the past seven months and the price has been trading sideways. The lower highs over the past four months are a concern and shows that selling pressure prevails. Thursday's price action broke on an intraday basis below key support of $2.12 and now our eyes are on all-time low of $2.09, as a break below it will have negative implications in the near term.

A bounce to $2.20 - $2.25 is likely to unfold in the short term, which may be considered as an exit opportunity for active investors.

More information

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Disclaimer(s): Analyst may own shares in some or all of the companies mentioned.

The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents ("Morgans") do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.