CNA trade ideas
Centrica PLC - Is that an ending diagonal?If my count is the correct one then I am expecting a decent rally in this UK stock possibly above 300.
Centrica failing at resistanceCentrica continues to trade in a long term down trend. The latest failure at overcoming trend resistance should set the shares up for another test of the recent lows.
We are sellers today targeting a move towards 188p, with a stop at 210p
Centrica eyes January highThe bullish break from the descending channel pattern marks the continuation of the rally from November low of 195.18. The doors have been opened for a break above 232.60 (Jan 16 high) and rally to January 23 high of 236.90.
Centrica PLC – Bullish break on chartsCentrica daily chart shows a breach of long term falling trend line (Sep 2013 high to July 2015 high and extended) followed by a inverse head and shoulder breakout.
However, bulls need to be patient since the rally from post Brexit low of 197.50 has been sharp and thus short-term exhaustion around the neckline is likely before the next leg upward resumes.
Overall, it appears on track to test 255 levels over next month or so. Being a classic defensive stock, it could hold its own even if FTSE100 turns risk averse in coming days.
On the lower side, a break below 232 would signal bullish invalidation.
Centrica – bears in control after last week’s gap down opening Support – 201.80, 194.20
Resistance – 219.05, 222.20
Gap down opening on May 5 after prices failed to capitalize on a bullish break from a larger falling trend line on daily chart indicates the recovery from Feb 11 low has ended and bears could take it lower to 194.20 levels in short-run.
On the higher side, gap filling may happen, but requires a move above 219.05 levels. However, bearish invalidation is seen only if prices break above falling trend line.
Short off tramline in CentricaPrice has come up to tramline which could be an area where the price falls again due to overbought stochastics, potential wave 4 completion and resistance from way back in 2012 around the 280 level.
Price has broken above tramline but as long as it doesn't go above 304 this analysis still stands in my opinion.
Targeting 200 which would fall on the tramline but at the moment this is just a long shot in the dark. If the price reaches the tramline before then exiting there would make sense.
The energy industry is in a bit of a lull at the moment which also supports this analysis.
Again this is just an opinion and is no way any guarantee it will happen.
