European Opportunities Trust PLC 

European Opportunities Trust PLC (LON: JEO) is an investment trust engaged in portfolio investment, established in 2000. The main objective of the trust is to invest in the securities of European companies, which has the potential for capital growth. The company invests in various sectors including consumer goods, healthcare, telecommunications, industrials, etc.

As per our previous recommendation on JEO as of January 05, 2021, we recommended a ‘Buy’ rating on the stock at GBX 709.50 from the technical analysis standpoint. Stock made a high of GBX 743 as on February 04, 2021 and witnessed an upside movement of ~4.72 percent from the recommended entry price. Prices are still sustaining near the 8 months’ high level and building momentum for the upside direction. Therefore, considering the recent price action and technical indicators analysis, we are of the view that the stock may catch an upside direction from here and hence recommend a ‘Hold’ rating on the stock. The summary of our previous ‘Buy’ rating, target levels, and price movement since the previous recommendation for JEO is provided as below:

Price Action Analysis (on the Weekly Chart)

JEO’s prices are continuously sustaining above the upward trend line that seems supportive of the upside move. Prices are trading near 8-month high and any breakout above resistance level GBX 743 may generate fresh buying in the stock. Volume is also showing an increasing trend with the prices and indicating strength for upside movement.  

On the weekly chart, RSI is trading at ~52 levels and indicating the start of a new upside trend.  CMP is above the 21-period and 50-period SMA with the positive crossover, further providing strength to the prices.

Conclusion:

Based on the above-mentioned price action and technical indicators analysis, we can conclude that European Opportunities Trust PLC is still looking technically well-placed on the chart and we recommend a ‘Hold’ rating on the stock from the current price level of GBX 743.

Investment Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.60:1.00), however, returns are generated within 2-4 weeks’ time frame. This may be looked at by Investors with sufficient risk appetite looking for returns within short investment duration. Investment recommendations provided in this report are solely based on technical parameters, and fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risk, currency risks, and social and political instability risks etc.

Note: 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 and we consider stocks with greater than or equal to 200,000 volumes as more liquid. 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.

The reference date for all price data, volumes, technical indicators, support, and resistance levels is February 04, 2021.

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 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. Our publications are NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) or engage in any investment activity under discussion.  Past performance is neither an indicator nor a guarantee of future performance.

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