Construcciones y Auxiliar de Ferrocarriles (BME: CAF) is a Spanish manufacturer of railway vehicles and busses, production of which was also affected by the coronavirus pandemic. However, the recent awarded contract from the Spanish state-owned RENFE company has come as a breath of fresh air for the company. CAF will supply RENFE with 37 new trains, its parts and maintenance for the next 15 years. The deal happened in the end of June, which probably helped support the stock from drifting lower.
From the technical side, we can see that the stock has been moving sideways from around the end of June, trading roughly between the 33.05 and 31.05 levels. As long as the share price remains within that range, we will stay neutral.
If the good news surrounding the awarded contract eventually sinks in with new investors and they see it as a positive for the company, CAF may get lifted above the upper bound of the aforementioned range, at 33.05. Such a move would confirm a forthcoming higher high and the next possible resistance area could be seen around the high of June 9th, at 34.40. If the buying doesn’t stop there, the next potential target might be at 35.50, which is the highest point of June.
Both the RSI and the MACD support the idea of remaining neutral for now. The RSI is somewhat flat and continues to move around 50. The MACD is still running alongside its trigger line, which coincides with zero.
On the downside, a drop below the lower end of the aforementioned range, at 31.05, could spook new investors from entering. Such a move may possibly open the way to some lower areas, initially aiming for the 29.60 hurdle, a break of which might set the stage for a move to the 27.70 level, marked near the inside swing high of May 19th and the low of May 20th.
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