Chart analysis: coal, RWE and Arch Resources
14th October 2021 08:05
by Alistair Strang from Trends and Targets
Share on
Independent analyst Alistair Strang looks at price potentials for two significant energy suppliers.
There’s something faintly silly about the forthcoming “Climate Change” conference in Glasgow, the COP26 affair. Glasgow, the one place in the UK where the climate never changes, always untrustworthy. We are curious how some of the coal miners listed internationally are doing, from RWE AG (XETRA:RWE) in Germany to Arch Resources (NYSE:ARCH) in the US.
While it appears true to say RWE.AG haven’t avoided controversy in Germany, their share present (currently around €31) has risen quite firmly from its low of €9 back in 2015. Even the pandemic thrashing in 2020 ‘only’ provoked reversal to the €20 mark, the price achieving new highs in the period since.
However, the company have a fair distance to climb, if the all-time high of €100 in 2008 will ever be challenged again. A glance at the internet reveals RWE intend to reduce their dependence on coal, during the next few years.
The immediate situation with RWE allows movement above just 33 to provoke some gains towards an initial 35.8. If exceeded, we can calculate a longer-term secondary at 38.9, along with the prospect of some hesitation when the price matches this year's highs.
The alternate scenario suggests below 29.5 could trigger reversal to an initial 26.7 with secondary, if broken, a future 21.2. The surprise from both scenarios is nothing forecast is particularly game-changing, tending to suggest whatever the result of a climate conference, the markets suspect RWE.AG will remain within a trading pattern developed during the past couple of years.
Source: Trends and Targets. Past performance is not a guide to future performance
Arch Resources, the second-largest supplier of coal in the US, and based in St Louis, Missouri, enjoy a share price chart that offers considerable hope for the longer term.
Presently trading around the $100 mark, the share price already looks ready to extend gains. If playing safe, above $105.5 calculates with the potential of an initial $118 with secondary, if exceeded, working out at a longer-term $149.
Such is the strength of movement, the share price needs below $72 to allow for weakness down to an initial $44. If broken, our secondary looks impossible, down at $5.7 and a new all-time low. Obviously, absolutely nothing currently suggests this as a danger.
About the only thing we can conclude is, despite coal being the victim of a media campaign, the numbers presently suggest the market isn’t paying attention.
Source: Trends and Targets. Past performance is not a guide to future performance
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.