One of the largest and oldest insurance providers in Spain, Grupo Catalana Occidente (BME: GCO), got hit strongly by the market turmoil, which happened in the end of February and the beginning of March. After starting off the year near the 31-euro mark, the stock took a nosedive during the above-mentioned period and ended up testing the area near the 16-euro mark. New investors saw good value in GCO at that price and managed raise it back in to the 20-ies territory. The price is currently trading above a medium-term tentative upside support line taken from the low of May 14th. Even if GCO retraces back down again, as long as it remains above that upside line, there is still a good chance for the stock to be picked up by new investors. For now, we will take a somewhat bullish approach.
As mentioned higher, if the price suddenly falls to the aforementioned upside support line, but fails to move below it, that may be a sign for the buyers to step in again. If so, GCO could make its way back to this week’s current high, at 22.30. If this time that barrier surrenders and breaks, the next potential target might be at 23.30, marked by the highest point of June.
The RSI and the MACD are both pointing slightly to the upside. In addition to that, the RSI is well above 50 and the MACD is fractionally above its trigger, while comfortably balancing above zero. Both indicators suggest a rising upside price momentum, which supports our overall view of aiming higher, at least for now.
Alternatively, if the previously discussed upside line breaks, that certainly may spook some new buyers from entering. But some new investors might get a bit more pessimistic about the near-term outlook, if the stock slides below the 19.24 hurdle, marked by the lowest point of July. This would confirm a forthcoming lower low and GCO could continue moving further in the southern direction, possibly aiming for the 18.50 and 18.32 levels, marked by the low of May 25th and the high of May 21st respectively. If that are doesn’t break the fall, a further decline might clear the way to the 17.52 zone, which is the low of May 21st.
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