Can AnteoTech (ASX:ADO) Sustain the Recent Gains?

AnteoTech Limited (ASX:ADO) has responded sharply on the back of a public announcement informing the market about a $304 million contract bagged by its customer Ellume from the Pentagon for its Emergency Use Authorization (EUA) COVID-19 at home test.

To Know More, Do Read: Guess what is making AnteoTech (ASX:ADO) stock roar on the ASX!

The stock has witnessed a gap up opening of ~ 60 per cent yesterday after it resumed trading post a trading halt.

Not just a massive gap up opening, the stock further climbed to an intraday high of $0.200, marking a 100 per cent gain in one trading session against its previous close.

However, by the end of the trading session, the stock witnessed some profit booking activity, closing at $0.185 or ~ 7.5 per cent below the day’s high.

ADO Daily Price Chart (Image Source: Refinitiv Eikon Thomson Reuters)

On the daily chart, it could be seen that the stock witnessed a volatility breakout with prices breaching the +2 Standard Deviation of the 20-day simple Bollinger Band®.  

  • Also, the stock gave a breakaway gap up opening, crossing the resistance line (upward sloping top trendline), which should now act as immediate support for prices.
  • At present, ADO is trailing in an uptrend with the stock trading above the 200- and 50-days exponential moving averages.
  • The second support for the stock is at $0.111, which could also be decisive as the same level is overlapping with the 50-day EMA. A break and price action below the same could seed bearish sentiments.
  • It could be seen that the -2 Standard Deviation of the Bollinger Band® is overlapping with the 200-day EMA, and the same level could now act as a major support for ADO.

On applying the technical indicators, it could be seen that the recent surge in prices has been backed by a large increase in volumes, inferred from a sudden upward increase in the On Balance Volume (OBV).

  • Also, after trading close to minus DI for a while in the consolidation phase, the Plus DI has suddenly spiked thanks to a spike in volatility towards upside.
  • The ability of the stock to sustain the current volatility breakout and support levels might dictate the next moves.

ADO Weekly Price Chart (Image Source: Refinitiv Eikon Thomson Reuters)

  • However, the trend in the stock seems to be largely positive, but a sudden increase in volatility has shifted stop loss levels at significant distances, making the stock a no play for risk averse investors.
  • On applying the Ichimoku Kin Hyo on a weekly chart, it could be seen that the stock is currently trading above Span A, which itself is trading above Span B, suggesting that the major trend is an uptrend.

Meanwhile, the major support for the stock is now at the sky-blue cloud area, which is around $0.133-0.123 or about ~ 28.10 to 33.51 per cent down against the recent close. However, a large risk in small caps stocks are usually a wide-known attribute, which many traders even try to cash-in.

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