After 24% gain in 3 months, SRG Global (ASX: SRG) shares form inverse head and shoulder pattern

 Highlights

• SRG Global operates through three segments- engineering and construction, mining services and asset maintenance.
• Recently, the company has secured a specialist facades contract from Lendlease, valued at AUD 30 million.
• SRG has upgraded its EBITDA guidance to AUD 79-80 million, following the integration of Asset Care Business.

SRG Global Limited (ASX:SRG) is a diversified industrial company that offers asset maintenance, engineering and construction, mining services, asset care and engineered products across the entire asset lifecycle.

In the last six months, SRG’s share price dropped by 22.45%; however, in the past three months, it has increased by 24.03%.

On 18 July 2023, the company shared that it had bagged a specialist facades contract from Lendlease, valued at approximately AUD 30 million. Under the agreement, SRG would design, supply and install specialist-engineered curtain wall facades at the Frankston Hospital Redevelopment. The contract is forecasted to be completed in 2024. Following the update, SRG’s share surged by over 2% on 18 July.In June 2023, the company secured many contracts. On 27 June, SRG announced that it secured multiple contracts worth AUD 65 million in Western Australia and Queensland. On 20 June 2023, the company revealed about securing AUD 50 million contract with Water Corporation Western Australia. On 15 June 2023, SRG announced that it has secured a contract of AUD 40 million with Lendlease.

On 10 May 2023, the company shared that it is upgrading its EBITDA guidance for the financial year 2023 (FY23) to AUD 79-80 million, backed by the integration of the Asset Care business. Triggered by the update, the stock price surged by 4.17% on the same day.      

Technical Analysis:

On the daily chart, SRG's price is trading with lower highs and higher lows formation, and since April 20, 2023, there has been a notable development, as the stock appears to be forming an Inverse Head and Shoulders (bullish reversal) pattern, indicating a potential shift towards a positive trend. Moreover, the recent crossover between the 21-period and the 50-period SMA further supports this positive observation. Prices are finding substantial support from both the 21-period and 50-period SMAs. Important support for the stock is AUD 0.630, while critical resistance is AUD 0.825.

Daily Technical Chart – SRG

The stock was analysed as per the closing price of AUD 0.745 per share as on 31 July 2023.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Technical Indicators Defined:

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock, and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

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

The Green colour line reflects the 21-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 21-period, prices are currently in a bullish trend (Vice – Versa).

The Blue colour line reflects the 50-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 50-period, prices are currently in a bullish trend (Vice – Versa).

The Orange/ Yellow colour line represents the Trendline.

The Purple 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.

Disclaimer

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