Meggitt PLC 

Meggitt PLC (LON: MGGT) is an engineering company that is engaged in designing and manufacturing high-performance components and sub-systems for the aerospace, defense, and selected energy markets.

As per our previous recommendation on MGGT as on April 06, 2021, we recommended a ‘Buy’ rating on the stock at GBX 470.90 from the technical analysis standpoint. Stock made a high of GBX 504.40 on April 06, 2021 and witnessed an upside gain of ~7.11 percent from the recommended entry-level and post that, entered the correction phase. Prices are still sustaining above the 21-period SMA and continuously taking support from it, indicating potential for an upward movement. Therefore, considering the recent price action and technical indicators analysis, we are of the view that in the next couple of sessions (1-2 weeks), the stock may witness an upward direction, and hence we recommend  a ‘Hold’ rating on the stock at the close price of GBX 460 (as on May 06, 2021). The summary of our previous ‘Buy’ rating, revised target levels, and price movement since the previous recommendation for MGGT is provided as below:

Price Action Analysis (on the Weekly Chart)

MGGT’s price broke the major resistance level GBX 481 on March 15, 2021, and since then hovering around the breakout level. On the weekly chart, prices are sustaining above the 21-period SMA and continuously taking support from it (avoid repeat sentences). Prices may catch an upward direction from the current levels and  test the resistance level GBX 515 followed by GBX 559 in the coming sessions.

The RSI (14-period) is trading at ~57 levels and indicating a positive trend for the stock. The 50-period SMA is above CMP and formed a positive crossover with the 21-period SMA, further providing strength to the prices.

Conclusion:

Based on the above-mentioned price action and technical indicators analysis, we can conclude that Meggitt 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 460 (as on May 06, 2021).

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.

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 May 06, 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. Past performance is neither an indicator nor a guarantee of future performance.

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