Technical analysis: 12 July 2021
About the author:
- Author name:
- By Violeta Todorova
- Job title:
- Senior Technical Analyst
- Date posted:
- 12 July 2021, 8:00 AM
Brickworks (BKW) – Target reached
In our last update on the 26th of March 2021 we discussed number of bullish developments on the chart and the likelihood of the price trading higher over the medium-term.
A strong rally has unfolded over the past few months and our initial upside price target of $21.50 has been reached and greatly exceeded.
The RSI and the MACD indicators have reached overbought levels suggesting that the price is likely to pull back soon. While we continue to like the stock over the long-term, and we anticipate the price to continue to fare well, the current price swing appears stretched as evidenced by the bearish divergence between the price and the RSI indicator, which usually invites pull backs.
Milton Corporation (MLT) - Overbought
MLT has been trading in a strong up trend since March 2020 which is still firmly intact. The current up swing posted a fresh record high of $6.50 pushing the weekly momentum indicators into extremely overbought territory.
The daily RSI and MACD indicators are also strongly overbought and we note the development of a small bearish divergence between the price and the RSI which shows that the internal momentum is deteriorating.
While at this juncture in time we don’t see a clear reversal signal on the chart, given the overbought weekly and daily momentum conditions, we are of the view that the stock is vulnerable to a pull back in the short-term. While we continue to like the stock over the long-term, we see the near-term upside from here as limited and believe the price is likely to take a breather in the coming months.
SCA Property Group (SCP) - Accumulate
The recovery from the March 2020 low has lost momentum and over the past six months the price has been trading sideways fluctuating between $2.28 and $2.70.
The current short-term down swing is approaching a band of support between $2.28 and $2.32 where buying interest is likely to start building up. The RSI and the stochastic indicators have reached oversold territory suggesting that the price is likely to bounce soon.
Given the proximity to support and the oversold momentum conditions, we see the current share price weakness providing an opportunity to buy the stock. The potential upside price target is $2.60. Over the medium-term, we favor further consolidation and we are of the view that the price will continue to trade sideways in the next 2-3 months.
PointsBet Holdings (PBH) - Buy
PBH has been trading in a strong up trend since March 2020 which is still technically intact. After posting a record high of $18.12 in February 2021 and overbought and diverging momentum conditions a pull back took place.
The price declined to a band of support between $9.54 and $11.15 where buying interest is likely to start building up. The medium-term down trend line marked in red in the chart below has been broken upwards recently showing the pull back is deteriorating.
The current down swing appears to be forming a higher low which is an encouraging sign. The stochastic indicator has bounced from oversold levels suggesting that the price is likely to rally in the short-term. The first potential upside price target is $14.00. Higher targets exist and we will discuss them as the price structure continues to progress.
Resolute Mining (RSG) – Building a bottom
In our last update on the 9th of August 2019 we discussed the proximity to a band of resistance between $2.14 and $2.35 and the overbought momentum conditions and closed our long position at $2.00.
A strong primary down trend has unfolded over the past two years which now appears to be approaching completion. The price declined around its previous key resistance of $0.45 where support is likely to hold.
The weekly RSI indicator completed an inverse head and shoulders pattern from oversold levels suggesting that higher price levels are likely to unfold over the medium-term. A subsequent break above resistance of $0.66 is highly likely which would confirm an imperfect ascending triangle. The pattern has bullish implications and shows that buying interest is building up. The initial upside price target based on the anticipated breakout is $0.80; however, over the long-term levels to $1.00 are achievable. Any short-term share price weakness to unwind the overbought stochastic readings should be considered a buying opportunity.
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