Down 61% in a year! Is a reversal likely for Incannex Healthcare Limited (ASX: IHL) shares?

Highlights

• Incannex Healthcare Limited (ASX:IHL) is a clinical-stage pharmaceutical development company
• This stock has corrected 61% in the last one year through 19 June 2023
• On Friday (16 June 2023), the company announced it recruited two lead principal investigators for a clinical trial investigating IHL-42X regarding the treatment of obstructive sleep apnoea 

Shares of Incannex Healthcare Limited (ASX:IHL), a clinical-stage pharmaceutical development company engaged in the research and development associated with medicinal cannabinoid and psychedelic pharmaceutical products and therapies, have been on a downward trend since September 2022.

This stock has corrected 61% in the last one year through 19 June 2023. On Friday (16 June 2023), the company announced it recruited two lead principal investigators for clinical trial investigating IHL-42X regarding the treatment of obstructive sleep apnoea.

This trial is a critical step for the IND opening Phase 2/3 study. In addition, the company intends to recruit nearly 45 sites across multiple jurisdictions for this pivotal trial. Previously (on 30 May 2023), IHL also announced that three world-leading clinical psychedelics experts joined Clarion Clinics Advisory Board (which is a collaborative venture between IHL and three leading Australian psychedelics experts, who are co-founders). On 30 May 2023, the company also affirmed the oversubscription for the entitlement offer of loyalty options announced on 3 May 2023.

However, these updates could not help revers the ongoing downtrend of IHL shares. Let's study the stock's price chart to get an idea about its possible near-term movement.

IHL’s Technical Analysis:

On the daily chart, IHL's price is confronting a short-term downward slope trendline established in Sep 2022; nonetheless, the stock is also developing bottom divergences compared to the relative strength index, which inclines to a positive bias. This suggests that if the stock manages to surpass the trendline, it has the potential to gain momentum to head higher. Prices are trading below both the 21-period and the 50-period SMAs, which may act as resistance levels for the stock; in contrast, the stock's most recent low might act as a support level. Important support for the stock is positioned at AUD 0.090, while key resistance is placed at AUD 0.125.

Daily Technical Chart – IHL

The technical levels for the stock were evaluated as per the closing price of AUD 0.105 per share, down 4.545%, as on 19 June 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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