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Technical Analysis: 18 March 2019

Violeta Todorova

PWR Holdings Limited (PWH) – short term bounce

The up trend from the August 2017 low has lost momentum over the past five months and the price has been trading sideways, fluctuating between $2.89 and $4.04. The latest short term down swing retraced to its previous support where strong buying interest was encountered. Friday's price action bounced off its support strongly on Friday and is likely to continue to trade higher in the short term. The RSI and the stochastic indicators have turned up from oversold territory also confirming our positive view in the near term.

The first potential upside price target is $3.80, however the price may overshoot to $4.00.

Emeco Holdings (EHL) – tactical buy

EHL has been trading in a downward trajectory since June 2018 which is still technically intact. The down trend has lost momentum and the price appears to have been building a base over the past three months. A bullish divergence between the price and the RSI indicator has formed on the daily chart suggesting that the price is likely to bounce in the short term. Given the improvement in the price structure and in the momentum conditions we open a tactical buy with a price target of $2.40. 

Over the medium term, levels to $2.80 are achievable.

Breville Group (BRG) – overbought 

BRG has been trading in a strong up trend since late December 2018 which is still technically intact. Last week's price action reached an all-time high of $16.96 and strongly overbought momentum levels. The RSI and the MACD indicators are turning lower suggesting that momentum is deteriorating. The current up swing has lost momentum over the past week and the price has been trading sideways in a narrow range. A break below minor support of $16.16 is likely and will confirm that a short term pull back is underway. 

While the primary up trend remains firmly intact, the stock is overbought on a weekly and daily basis and we are of the view that the price is likely to take a breather in the months ahead. 

Ramsay Health Care (RHC) – approaching resistance

RHC has been trading in an upward trajectory since October 2018 which is still technically intact. The current upswing is approaching its key resistance of $66.10 where initial selling pressure is likely to arise. The RSI and the MACD indicators have reached overbought territory suggesting that the price is vulnerable to a short term pull back.

Given the proximity to key resistance and the overbought momentum conditions we are of the view that the near term upside from here is likely to be limited.

Smartgroup (SIQ) – building a small base 

The decline from the August 2018 high has lost momentum over the past three months and the price has been trading sideways, fluctuating between $8.11 and $10.63. The latest short term down swing has lost momentum and over the past few weeks the price has been trading sideways and building a small base. The RSI and the MACD indicators are turning higher from oversold territory suggesting that the price is likely to trade higher in the short term.

The initial upside price target is $9.50. Over the medium term, higher price levels are achievable.

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.