FTSE All-Share Traded Lower, Two LSE Listed Stocks Gaining Upside Momentum – DEC &MTRO

Company Overview: Diversified Energy Company PLC (LON: DEC) is an energy company focused on natural gas and liquids production, transport, marketing, and well retirement. The company acquires existing, long-life assets and invests in them to improve environmental and operational performance until retiring those assets. Metro Bank Holdings PLC (LON: MTRO) is the holding company of Metro Bank PLC. It is a deposit-taking and lending institution with a focus on retail, private, small, and medium-sized enterprises (SME) and commercial customers. This Report covers the Price Action and Technical Indicators Analysis along with the Target Levels, Stop Loss, Support Levels, Resistance Levels, and Recommendations on these two stocks.

FTSE All-Share Index (.FTAS) Market Round-Up

Last week the FTSE All-Share Index (.FTAS) settled on a negative note, following the bearish move from the US equity markets. Notably, FTAS settled at 4417.83 with a loss of 0.12% for the week ending November 15, 2024. The recent move in the domestic indices is majorly led by the positive indications from the global equity markets.     

From a technical perspective, the index shows a bullish outlook, trading above a key ascending trendline and a strong horizontal support level, indicating the potential for further upward movement. The 14-period RSI, currently at 46.98, signals positive momentum and suggests strength as the index recovers from the support zone. Moreover, the current market price (CMP) is positioned above the 50-period Simple Moving Average (SMA), reinforcing the support structure and boosting the overall optimistic market sentiment. These technical indicators suggest that the index may maintain an upward trajectory soon.

Global Markets Wrap-Up

Wall Street indices inched lower in the last week and settled on a negative note. Notably, the S&P 500 settled at 5870.62 with a loss of ~2.08%, while the NASDAQ Composite Index settled at 18680.12 with a loss of ~3.14% for the week ending November 15, 2024.

Having understood the US market performance over the past week, taking cues from major global news, and based on technical analysis of the FTSE All-Share Index (.FTAS) for the upcoming week, now have a look at the two LSE-listed.

stocks pick from the technical analysis standpoint. Noted below are the recommendations based on entry price, target prices, and stop-loss Diversified Energy Company PLC (LON: DEC) and Metro Bank Holdings PLC (LON: MTRO) for the next 2-4 weeks duration:

Diversified Energy Company PLC (LON: DEC) Noted below are the key price indicators for the recommended stock:

Price Action Analysis (on the Weekly Chart)

On the weekly chart, DEC shows strong bullish signals, trading above an upward sloping trendline and forming a positive candlestick pattern, indicating strong momentum. The stock remains comfortably above key support levels, pointing to further upside potential. It is approaching resistance at GBX 1351.00, which could be tested in 2-4 weeks. A breakout above this level, supported by rising volume, may propel the stock toward the next resistance at GBX 1431.00, further strengthening the bullish outlook. This technical setup suggests a continued positive trend for the stock in the near term.

Technical Indicators Analysis (On the Weekly Chart)

The RSI moving in the positive zone with a reading of 63.47 suggests that the stock has some bullish momentum, supported by volumes indicating increased trading activity. The CMP is trading above the trend-following indicators 21-period (SMA) may act as a small support level.

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, Diversified Energy Company PLC is looking technically well-placed on the chart, and a ‘Speculative Buy’ recommendation has been given on the stock. Investment decisions should be made depending on an individual’s appetite for upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. The summary of recommendation is as follow:

Metro Bank Holdings PLC (LON: MTRO)

Price Action Analysis (on the Daily Chart)

On the daily chart, MTRO is firmly positioned above a key horizontal support level, coupled with a bullish candlestick pattern that signals strong upward momentum. This bullish trend is further supported by rising trading volume at current levels. The stock is approaching its next resistance at GBX 104.00, which may be tested in the next 2-4 weeks. A breakout above GBX 104.00, ideally supported by higher volumes, could drive the stock towards the next resistance at GBX 110.00.

Technical Indicators Analysis (On the Daily Chart)

The RSI moving in the positive zone with a reading of 70.57 suggests that the stock has some bullish momentum, supported by volumes indicating increased trading activity. The CMP is trading above the trend-following indicators 21-period & 50-period SMAs and may act as a small support level.

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, Metro Bank Holdings PLC looking technically well-placed on the chart, and a ‘Speculative Buy’ recommendation has been given on the stock. Investment decisions should be made depending on an individual’s appetite for upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. The summary of recommendation is as follow:

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Upcoming Major Global Economic Events

Market events occur on a day-to-day basis depending on the frequency of the data and generally include an update on employment, inflation, GDP, consumer sentiments, etc. Noted below are the upcoming week's major global economic events that could impact the FTSE All-Share Index and listed stocks’ prices.

Related Risks: This report may be looked at from a high-risk perspective and recommendations are provided for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks, etc.

Note 1: Past performance is not a reliable indicator of future performance. 

Note 2: Individuals can consider existing from the stock if the Target Price mentioned as per the technical analysis has been achieved and subject to the factors discussed above. 

Note 3: How to Read the Charts?

The Green colour line reflects the 21-period moving average while the red line indicates the 50-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume and liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: In general, it is a level to protect further losses in case of unfavorable movement in the stock prices.

Risk Reward Ratio: Risk reward ratio is the difference between an entry point to a stop loss and profit level. This report is based on ~60% Stop Loss of the Target 1 from the entry point.

A trailing stop-loss is a modification of stop-loss in case of favourable movement in the price to protect the gains. Individuals can Trail the Stop-Loss as per the aforementioned levels if the stock price achieves more than 50% of the Target 1. Individuals should consider exiting from the position as per the Trailing Stop-Loss level if the price starts moving downwards after achieving more than 50% of the Target 1.

The reference date for all price data, currency, technical indicators, support, and resistance levels is November 18, 2024. The reference data in this report has been partly sourced from REFINITIV.

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

GBP: British pound sterling

GBX: British pence sterling

RSI: Relative Strength Index

Note: Trading decisions require a thorough analysis by individuals. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.