Technical analysis: 24 June 2021

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
24 June 2021, 9:00 AM

Pro Medicus (PME) - Overbought

PME has been trading in a strong up trend since March 2020 posting a fresh record high of $57.61 on the 23rd of June 2021.

The strong rally has pushed the daily and weekly RSI indicator readings into overbought levels and we note the formation of a bearish divergence between the price and the weekly RSI over the past four months, suggesting that the price is vulnerable to a pull back in the weeks ahead.

The daily RSI indicator completed a top reversal pattern from overbought levels and the daily MACD indicator has reached strongly overbought levels. Given the overbought and deteriorating daily and weekly momentum conditions, we are of the view that the up trend is likely to take a breather in the months ahead and that the price is likely to pull back from here. The current share price strength presents an opportunity for active traders to lighten positions.

Breville Group (BRG) – First target reached

In our last update on the 9th of April 2021 we discussed the improvement in the momentum conditions, the likelihood of the correction to be approaching a turning point and highlighted that higher prices are likely to unfold over the short and mediumterm.

A strong rally has unfolded over the past two months and our initial upside price target of $30.00 has now been reached. The daily RSI indicator has reached overbought territory pointing to a likely pull back in the short-term.

Overall, the price action and the momentum conditions remain constructive at this point and we favor higher prices over the medium-term. Our second upside price target of $33.00 remains unchanged. We see any further strength from here as an opportunity to lighten positions.

Telstra Corporation (TLS) – Target reached

In our last update on the 4th of February 2021 we discussed number of bullish developments on the chart and the likelihood of the price trading higher in the months ahead.

The price extended its march higher over the past few months and our initial upside price target of $3.40 has now been reached and exceeded. While at this juncture in time there is no sign the up trend is reversing course, we note the formation of a bearish divergence between the price and the daily RSI indicator.

Although, the up trend appears to be still in progress at this point, we see the current and any further share price strength as an opportunity to lighten positions.

CSL Ltd (CSL) – Target reached

In our last update on the 27th of May 2021 we discussed the improvement in the momentum conditions and lifted our price target to $305.00.

The rally extended its course over the past month as anticipated and our price target has now been reached. The current up swing has rebounded to its long-term down trend line marked in red, crossing around $306.00 which is still acting as a dynamic resistance for the stock.

The daily RSI indicator has declined from overbought levels breaking below its up trend line marked in green in the first sub-chart below. This suggest that momentum is deteriorating and the price is vulnerable to a pull back in the short-term. Overall, at this point we don’t see a clear reversal of the rally from the Match 2021 low, however given the proximity to dynamic resistance and the overbought momentum conditions, we are of the view that the 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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