Technical analysis: 2 July 2021

About the author:

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

Over The Wire (OTW) –At resistance

OTW has been trading in a strong up trend since March 2020 which is still technically intact.

The current secondary up swing has rebounded to its previous key resistance of  $5.00  where  selling  pressure  is  likely  to  start  building  up. A  bearish divergence between the price and the RSI indicator has formed over the past few months showing that momentum is deteriorating.

The RSI indicator broke below its support suggesting that the price is likely to pull back in the short-term. A break below minor support of $4.62 would confirm that a small top is in place and trigger a decline to $4.40 in the week(s) ahead.

Computershare (CPU) –Target reached

In our last update on the 6th of May 2021we discussed the likelihood of the up trend line crossing at $13.70 to provide support and recommended clients buy the stock.

A strong rally has unfolded over the past two months and our upside price target of $16.50 has now been reached. The current upswing has rebounded close to its previous key resistance of $18.20 where selling pressure is likely to start building up.

The RSI and the MACD indicators have reached overbought territory suggesting that the price is vulnerable to a pull back in the short-term. While we do continue to like the stock on a long-term basis, given the proximity to key resistance and the overbought momentum conditions, we are of the view that any further short-term upside from here is likely to be limited (if any).

Xero (XRO) –Target reached

In our last update on the 17th of May 2021 we discussed the oversold nature of the stock and recommended active clients buy the stock.

A strong rally has unfolded over the past month and our upside price target of $135.00 has now been reached and exceeded. The price rebounded to its down trend line from the December 2020 high crossing at $143.90 where initial selling pressure is likely to arise.

While we continue to like the stock over the long-term, given the proximity to dynamic resistance and indecision of the bulls to decisively break through, we are of the view that further consolidation is likely in the weeks ahead.

Strandline Resources (STA) -Accumulate

STA has been trading sideways over the past year fluctuating between $0.17 and $0.30. The current short-term down swing is approaching a band of support between $0.17 and $0.18 where buying interest is likely to start building up.

The RSI and the MACD indicators are approaching oversold levels suggesting that the price is likely to bounce soon. Given the proximity to a band of support and to oversold momentum levels, we see the current short-term share price weakness as an opportunity to buy the stock.

The first potential upside price target is $0.24. Over the medium-term, levels to $0.30 appear achievable. Overall, the momentum indicators remain in neutral territory and over the next six to twelve months we favour further consolidation.

Incitec Pivot (IPL) –Double Blessed Buy

IPL has been trading in a slow but steady up trend since March 2020 which is still technically intact. The correction from the March 2021 high has lost momentum over the past month and the price has been trading sideways, fluctuating within the boundaries of a small ascending triangle.

The pattern has bullish implications and suggests that an upward breakout is likely to occur soon. A decisive break above minor resistance of $2.45is highly likely in our view and would confirm that the correction is complete.

The first potential upside price target based on the breakout is $2.70. Over the medium-term, levels to $2.90 appear easily achievable. The current share price weakness presents a good opportunity to buy the stock. 

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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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