Technical analysis: 22 June 2020

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
22 June 2020, 11:20 AM

Nick Scali (NCK) – Approaching resistance

After bottoming at $2.65 on the 23rd of March 2020 the stock rallied strongly with Friday’s price action creating a large gap and reaching an intra-day high of $7.14. The daily MACD and RSI indicators have reached overbought territory, suggesting that the rally might start running out of steam.

The weekly RSI indicator is approaching overbought territory too suggesting that the secondary up trend is likely to take a breather soon. Given the proximity to a band of resistance between $7.59 and $8.45, we are of the view that the near term upside from here is likely to be limited.

Splitit Payments (SPT) – Take profits

In our last update on the 4th of June 2020 we discussed the likelihood of the price trading higher based on the improvement in the momentum conditions and the bullish breakout from the ascending triangle pattern. We recommended clients buy the stock on weakness and the price declined to the breakout point of $0.60 providing a great buying opportunity.

A strong rally has unfolded last week, greatly exceeding our price target of $0.90. Friday’s price action posted an intra-day high of $1.92 and has reached strongly overbought territory. While we continue to like the stock and the sector, given the proximity to its all-time high of $2.00 and the overbought momentum conditions, we recommend active clients to take profits.

Adairs (ADH) – Approaching resistance

After bottoming at $0.44 on the 23rd of March 2020 the stock rebounded strongly and has been trading within the boundaries of an up trend channel over the past three months. The current up swing is fast approaching a multiple key resistance level of $2.74 where initial selling pressure is likely to be encountered.

The RSI and the MACD indicators have reached overbought territory suggesting that the price is vulnerable to a pull back in the short term. Although, at this point there is no reversal signal evident on the chart, given the proximity to key resistance and the overbought momentum conditions, we are of the view that the short term upside from here is likely to be limited and a pull back could unfold in the coming weeks.

Hotel Property Investments (HPI) – Approaching resistance

After bottoming at $1.45 on the 24th of March 2020 the price rallied strongly and is fast approaching a band of resistance between $3.56 and $3.69. The daily MACD and RSI indicators have reached overbought territory suggesting that the price is vulnerable to a pull back in the short term. The weekly RSI indicator is approaching overbought levels too, suggesting that the overhead band of resistance is likely to exert selling pressure.

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

More information

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Disclaimer: Analyst may own shares. 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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