Coca-Cola Amatil finding strong support

by Michael Gable

The expectation of flat earnings for CCL was not received well by investors after the company’s AGM in early May. The share price took a hit but often when a stock does that you see it then bounce and retest that low. A set-up that I like looking for in these circumstances is where the share price goes to a new low whilst showing good divergence on the RSI. That normally leads to another bounce but it is often stronger and could last a few weeks. We have now seen that on CCL. There are also a couple of other points worth noting. The first one is that during the last two years, this level as provided some very strong resistance, so I would expect that we are now at good support. Secondly, we appear to have fallen from the March high in a neat 5 wave structure. That tells me to expect a 3 wave counter trend move. If we recover only 50% of the fall, it takes us right up to where the stock gapped down in May. Therefore, I would expect to now see CCL rally for a few weeks up to at least $13.80 before failing.

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