CMC Markets PLC 

CMC Markets PLC (LON: CMC) is a UK-based financial services company. The company provides online financial trading in shares, contracts for difference (CFDs), spread, and currencies across various global markets. The company has a presence in UK, Ireland, Europe, Australia, New Zealand, Singapore, and Canada.

As per our previous recommendation on CMC as on May 25, 2021, we recommended a ‘Buy’ rating on the stock at GBX 470.40 from the technical analysis standpoint. Stock made a high of GBX 515.00 on June 08, 2021 and witnessed an upside gain of ~9.48 percent from the recommended entry-level. Thereafter, the stock witnessed a downside correction from the higher levels and recently took the support of an upward sloping trend line, indicating the possibility of upside direction from hereon. Therefore, considering the recent price action and technical indicators analysis, we are of the view that the stock may witness an upward direction again and hence we recommend a ‘Hold’ rating on the stock at the close price of GBX 448.00 (as on June 25, 2021) for the next couple of sessions (1-2 weeks). The summary of our previous ‘Buy’ rating, revised target levels, and price movement since the previous recommendation for CMC is provided as below:

Price Action Analysis (on the Weekly Chart)

CMC’s prices are sustaining above an upward sloping trend line for more than a year and currently trading in a correction phase. Prices are trading around the trend line support zone and for the short-term (1-2 weeks) the stock may witness an upward direction. Now the next major resistance level appears at GBX 560.00 and prices my test the level over the coming sessions.  

On the weekly chart, RSI is trading at ~50.40 levels and indicating a positive trend for the stock. The CMP is above the 50-period and further providing strength to the prices, however, sustaining below the 21-period SMA.

Conclusion:

Based on the above-mentioned price action and technical indicators analysis, we can conclude that CMC Markets PLC is still looking technically well-placed on the chart, and we recommend a ‘Hold’ rating on the stock at the close price of GBX 448.00 (as on June 25, 2021).

Note 1: Note 1: Investors can consider exiting from the stock if the Target Price mentioned as per the technical analysis has been achieved and subject to the factors discussed above. 

Note 2: 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 trend. 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 as 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 where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

A trailing stop-loss is a modification of stop-loss in case of favourable movement in the price to protect the gains. We suggest Investors to Trail the Stop-Loss as per the aforementioned levels if the stock price achieves more than 50% of the Target 1. Investors 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, volumes, technical indicators, support, and resistance levels is June 25, 2021. 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

USD: United States dollar 

Note: Trading decisions require a thorough analysis by investors. Technical reports in general chart out metrics that may be assessed by investors before any stock evaluation. The above are illustrative analytical factors used for evaluating the 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.

Disclaimer

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