McMillan Shakespeare Limited (MMS) Chart OverviewThe current price is AUD 15.86, reflecting a significant drop of 10.04% from the previous close. This suggests a sharp negative sentiment and reaction to recent business update and outlook provided.
Support and Resistance Levels
Support Levels: The EMA 50 (around AUD 15.80) is a potential immediate support level. The next major support could be around the AUD 14.00 to AUD 14.50 range, where the EMA 100 lies and coincides with a previous price consolidation area in mid-2022.
Resistance Levels: The recent high near AUD 18.00 serves as a significant resistance level. This is where sellers have previously come in strong, and it aligns with the most recent peak before the sharp decline.
Potential Trade Setup
Bullish Scenario (Buying Opportunity)
Entry Point: If you believe the longer-term trend (indicated by the EMA 100 and EMA 200) will prevail, a potential buying point could be near the current EMA 50 (around AUD 15.80). Waiting for a confirmation of a reversal, such as a bullish candlestick pattern or a bounce off this level, would provide a safer entry.
Profit Target:
First Target: AUD 17.00 (near the recent swing highs). This level would provide a good risk-to-reward ratio for a short-term trade.
Second Target: AUD 18.00 (recent peak). If momentum continues, breaking this resistance could lead to a new uptrend.
Stop Loss: A stop-loss could be placed slightly below the EMA 100, around AUD 14.00, to protect against a deeper correction. This would be below the last significant low, ensuring that if the price continues downward, you're out of the trade.
Bearish Scenario (Shorting Opportunity)
Entry Point: If the sentiment remains bearish, a potential short-selling opportunity could arise if the price breaks below the EMA 50 with strong volume and bearish candlestick confirmation.
Profit Target:
First Target: AUD 14.50, which aligns with the EMA 100 and a previous support area.
Second Target: AUD 13.00, where there was historical price action support in 2021.
Stop Loss: A stop-loss could be placed just above the recent high at AUD 17.00 to mitigate the risk of a reversal.
Volume Analysis
Volume bars at the bottom of the chart show trading activity, with larger bars indicating higher volume. The recent drop accompanied by high volume suggests strong selling pressure. If this continues, it could confirm the bearish sentiment. Conversely, a drop in volume with declining prices might suggest a weakening bearish trend, potentially signaling a reversal impact stock prices.
Based on the chart and current technical setup:
Bullish traders might look for signs of support around the EMA 50 or EMA 100 and seek confirmation of a reversal before entering a trade.
Bearish traders might focus on the recent downward momentum and look for a break below current support levels to continue the trend.
