Technical analysis: 18 June 2020

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
18 June 2020, 12:30 PM

IPH Limited (IPH) – Bullish breakout

The recovery from the March bottom has lost momentum over the past two months and the price has been trading sideways in a narrow range between $7.01 and $7.88.

The recent price action breached its overhead resistance of $7.88, showing that buying pressure is building up. The RSI indicator has breached its bear market resistance, showing improvement in the momentum conditions.

A decisive break in the price is likely to follow which could trigger further strength in the near term. The potential upside price target based on the breakout is $8.70.

Vicinity Centres (VCX) – Deterioration in momentum

VCX has bottomed at $0.90 on the 30th of March 2020 and has been trading in a secondary up trend over the past ten weeks. The up trend has lost momentum over the past few weeks and the price has been trading sideways, fluctuating between $1.51 and $1.86.

The medium term up trend line on the RSI indicator has been broken earlier in the week, showing that momentum is deteriorating. As long as minor support of $1.51 holds, the secondary up trend remains intact and the price is likely to continue to trade within the boundaries of its current trading range between $1.51 and $1.86.

First Cloud Technology (FCT) – Double Blessed

Buy The down trend from the March 2019 high has lost momentum over the past three months and the price has been trading sideways, building a base. The leading RSI indicator broke above its bear market resistance for the first time since the down trend has started, showing that momentum is improving.

This suggests that higher prices are likely to unfold in the month(s) ahead. A subsequent break above minor resistance of $0.105 is likely to follow, which in turn will confirm that a new secondary up trend has started.

Given the encouraging technical setup and the improvement in the momentum conditions, we are comfortable to buy the stock at current price levels, before an actual breakout has occurred. The potential upside price target based on the anticipated breakout is $0.16.

Costa Group Holdings (CGC) – Double Blessed

Buy CGC has been trading in a primary down trend since June 2018 which is still technically intact. The down trend has clearly lost momentum over the past seven months and the price has been trading sideways, fluctuating between $2.37 and $4.45.

The current short term down swing has retraced to its up trend line marked in red in the chart below, where support is likely to hold.

The RSI indicator has approached oversold territory, suggesting that the price is likely to bounce soon. Given the proximity to dynamic support and the oversold momentum levels, we are comfortable to buy the stock at current price levels. The potential upside price target is $3.40.

Rio Tinto (RIO) – Approaching resistance

RIO has been trading sideways over the past year fluctuating between $72.77 and $107.99. The secondary up trend from the March low is unfolding within the boundaries of an up trend channel which is still technically intact.

While the secondary up trend in the price and in the RSI indicator are in force at present, the momentum conditions are overbought.

Given the proximity to key resistance of $107.99 and the overbought momentum readings, we are of the view that the short 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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