Technical analysis: 25 June 2021

About the author:

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

Zip Co (Z1P) – Lifting our target

In our last update on the 11th of June 2021 we discussed number of bullish developments on the chart and the likelihood of the price rallying in the weeks ahead.

The prices rebounded strongly over the past two weeks and our initial upside price target of $9.00 has now been reached. The daily RSI indicator broke above its bear market resistance suggesting that higher price levels are likely to unfold in the month(s) ahead.

Given the recent improvement in the momentum conditions we lift our price target to $10.50. In the short-term, the stock could experience a mild pull back as the RSI and the stochastic indicators have reached overbought levels. Such potential short-term share price weakness would provide an opportunity to add to positions.

Boral (BLD) – Deterioration in momentum

BLD has been trading in a strong up trend since March 2020 fluctuating within the boundaries of a narrow up trend channel, which shows that momentum has been strong.

While on prima vista the price action is still constructive at this point and remains within the boundaries of its channel, we note the development of a bearish divergence between the price and the daily RSI indicator over the past two months, which shows deterioration in the underlying momentum conditions.

Given the recent deterioration in the momentum conditions, we are of the view that the pace of the up trend is likely to moderate and soon the trend could take a breather and probably correct either in time or in price.

Australian Ethical (AEF) - Buy

AEF has been trading in a volatile and choppy up trend since March 2020 which is still technically intact. The recent pull back has retraced close to its long-term up trend line crossing around $6.00 where support is solid and is likely to hold.

The pull back has lost momentum over the past two weeks and the price established a small double bottom. Thursday’s price action broke above minor resistance of $7.86 confirming the pattern and suggesting that the correction is most probably complete.

The daily RSI indicator completed a bottom reversal pattern from oversold territory and the daily MACD indicator has turned up from strongly oversold levels. Both indicators suggest that there is strong probability of the price rallying in the weeks ahead. The first potential upside price target is $9.00. Over the medium-term, levels to $10.50 are feasible.

NEXTDC (NXT) – Buy on weakness

After reaching a record high of $14.10 in November 2020 a pull back to unwind the overbought and diverging weekly momentum conditions took place.

The pull back has clearly lost momentum over the past few months and a slightly higher low is now in place. The mediumterm down trend line marked in red in the chart below has been broken upwards recently showing that the decline is losing momentum.

In our last update on the 7th of June 2021 we recommended clients buy the stock around $11.00 in anticipation of a re-test of the previous resistance of $12.06 in the short-term. The current up swing slightly broke above this level, as expected and highlighted in our report, showing that buying interest is building up. A subsequent decisive break above this level of resistance is highly likely which would confirm the correction is complete and trigger higher prices in the months ahead. Our medium-term upside price target of $13.50 remains unchanged. Any short-term share price weakness would provide an opportunity to add to positions.

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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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