Technical Analysis: 21 December 2020

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
21 December 2020, 10:00 AM

Nanosonics (NAN) - Overbought

NAN has been trading sideways over the past year, fluctuating between $4.01 and $7.73.

The correction from the June 2020 high has found strong support in November 2020 and the price has bounced strongly over the past six weeks.

Last week’s price action posted a fresh record high of $7.81, reaching strongly overbought daily momentum readings.

While we continue to like the stock over the long-term, given the proximity to key resistance and the strongly overbought momentum readings, we are of the view that the short-term upside from here is likely to be limited.

We see the current share price strength as an opportunity for active traders to lighten positions.

Regis Resources (RRL) – Double Blessed Buy

RRL has been trading sideways over the past two years fluctuating between $2.90 and $6.72.

After reaching a high of $6.18 in July 2020 the stock started trading in a secondary correction which is still technically intact.

A bullish divergence between the price and the RSI indicator has formed over the past two months, showing that momentum is improving.

The RSI indicator has been fluctuating within the boundaries of an ascending triangle suggesting that there is a high probability of an upward breakout to occur.

A break above minor resistance of $4.04 is highly likely, which could trigger a fast rally to $4.40. Over the medium-term, levels to $4.80 appear easily achievable.

Technology One (TNE) – Approaching support

TNE has been trading sideways over the past year, fluctuating between $6.36 and $10.26.

The current short-term pull back has approached a band of support between $7.47 and $7.97 where initial buying interest is likely to arise.

The daily RSI and stochastic indicators have reached oversold levels, suggesting that the price is likely to bounce in the short-term.

The initial upside price target is $9.00, however over the medium-term higher price levels are achievable.

Given the proximity to a band of support and the oversold momentum conditions, we see the current price levels as attractive to accumulate the stock.

Reece (REH) - Overbought

REH has been trading in a strong secondary up trend since March 2020 which is still technically intact.

Last week’s price action entered uncharted territory and has posted a new record high of $16.74.

The daily RSI and MACD indicators have reached strongly overbought territory suggesting that the price is vulnerable to a pull-back in the short-term.

The weekly momentum conditions are overbought as well and we note a small bearish divergence between the price and the RSI indicator, which suggests the rally is likely to take a breather in the coming weeks.

While we continue to like the stock over the long-term, given the overbought weekly and daily momentum readings, we are of the view that the near-term upside from here is likely to be limited.

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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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