Technical analysis: 4 October 2018

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
04 October 2018, 9:52 AM

Reliance Worldwide (RWC) – double blessed buy

RWC has been trading in a strong up trend since February 2017 which is still firmly intact. The current pull back is clearly losing momentum and the price appears to have been in the process of building a small base. The RSI indicator is approaching oversold territory suggesting that the price is likely to bounce soon.

The initial upside price target is $5.70. Over the medium term, levels to $5.92 are achievable. Given the proximity to support of $5.03 and the oversold momentum levels, we are comfortable to start accumulating the stock around current price levels. 

Resolute Mining (RSG) – tactical buy

RSG has been trading sideways over the past year, fluctuating between $0.94 and $1.44. The latest short term down swing has lost momentum over the past three weeks and the price has been in the process of building a small base. The RSI and the MACD indicators are turning positive from oversold territory suggesting that the price is likely to bounce in the near term. We anticipate a break above minor resistance of $1.13 which is likely to trigger a rally to $1.25.

Given the proximity to a band of support between $0.94 and $1.02 and the improving momentum conditions, we are comfortable to buy the stock around current price levels. 

Perseus Mining (PRU) – bullish breakout

The decline from the July 2018 high has lost momentum over the past month and the price has been trading sideways, building a small base. Wednesday’s price action decisively broke above minor resistance of $0.37 suggesting that the correction is complete and that higher prices are likely to unfold in the week(s) ahead.

The initial upside price target based on the breakout is $0.44, however the price may overshoot. 

Paradigm Biopharmaceuticals (PAR) – deterioration in momentum

PAR has been trading in a strong up trend since April 2018 which started losing momentum over the past month. After posting a high of $1.07 in August 2018 the price has been trading sideways, within the boundaries of a bearish descending triangle. While at this point the pattern is not confirmed, the lower highs on the daily chart are a clear sign that the selling pressure is building up. We anticipate a break below support of $0.86, which will confirm that the intermediate up trend is complete and trigger further weakness in the weeks ahead.

The downside price target based on such potential breakout is $0.70. 

Ridley Corporation (RIC) – trim

RIC has been trading sideways over the past year, fluctuating between $1.24 and $1.62. The current up swing is approaching its all-time high of $1.62 where strong selling pressure is likely to arise. The RSI and the MACD indicators have reached overbought territory suggesting the price is vulnerable to a pull back.

Given the proximity to key resistance and the overbought momentum readings, we see the near term upside from here as limited. Therefore, we recommend active clients trim positions. 

More information

Morgans clients can login to view all recent technical analysis on companies we cover by browsing the research section and filtering by 'technical analysis' in the Market Updates section. If you are interested in finding out more, please contact your nearest Morgans office.

Disclaimer: 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.

 

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