The technical picture of the Portuguese Mota-Engil SGPS SA stock (ELI: EGL) on our 4-hour chart shows that, after exploding to the upside on April 1st, the share price is now correcting lower. The corrective price action is maintained within a falling channel pattern. The overall picture from the start of April indicates that we might be seeing a possible bullish flag pattern. To support the upside scenario in the near term, we notice that the stock continues to balance above a short-term tentative upside support line drawn from the low of March 25th. Although there are a few indications that we could see a move higher in the near term, we would still prefer to wait for a violation of the upper side of the channel first. Hence our cautiously-bullish approach for now.
If the upper bound of the aforementioned falling channel breaks and the share price rises above the 1.475 barrier, marked by the high of April 9th, that may attract more buyers into the game, potentially increasing the stock’s chances of moving higher. EGL could then travel towards the 1.504 hurdle, marked near the highs of March 3rd and 8th, where the upmove might get halted temporarily. However, if EGL continues to trade somewhere above the previously-mentioned upside line, new buyers could join in. If this time the 1.504 obstacle surrenders, this could push the stock further north, possibly targeting the 1.544 level, marked near the peaks of February 26th and April 6th.
Despite pointing slightly lower, the RSI is still above 50. The MACD is also pointing a bit lower, while running below the trigger line, but remains above zero. The two oscillators are still showing positive price momentum and are coming in line with the bullish pattern idea.
Alternatively, if EGL continues to drift lower and breaks the previously discussed upside line, that may spook new buyers from entering the arena, especially if the share price also falls below the 1.428 hurdle, marked by the intraday swing highs of March 30th and 31st. The stock might then drift to the 1.392 zone, marked by the current lowest point of April, where it could receive a slight hold-up. If there are still no new buyers around that price, the slide could continue and EGL may end up testing the 1.376 obstacle, or the 1.364 level, marked by the lowest point of March.
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