Crown Resorts chart outlook

At this stage it’s very hard to get a handle on whether the arrest of Crown’s staff in China represents a short term problem or a medium term game changer for the investment outlook. While the share price has staged a minor recovery today, the chart situation remains distinctly nervous.

News that Crown staff have been arrested in China creates doubts about the Company’s near term earnings and, perhaps more significantly, its longer term strategic direction. Chinese VIP customers are a key part of Crown’s casino stategy. At this stage it’s very hard to get a handle on whether this situation represents a short term problem or a medium term game changer for the investment outlook. It may also take some time to resolve.

While the share price has staged a minor rally today, it remains inside yesterday’s range. Price broke support of the April and June lows yesterday. The slow stochastic in the box below the chart is also heading below 50% but still well out of the oversold zone. This suggests plenty of scope for downside risk if the market begins takes out yesterday’s low in the near future.

If the current downtrend keeps going, I’ve marked a couple of potential supports on the chart.

  • The first is around $10.50/$10.75. Here we see the 78.6% Fibonacci retracement and the December low
  • The second is around $9.50/$9.75. This consists of the September 2015 low. Not far below that is the 61.8% Fibonacci retracement of the last major uptrend. This is not shown on this zoomed in chart but cuts in around $9.50

Looking at things the other way, it is would be hard to start getting too confident about any major recovery until price moves past yesterday’s high at $11.95. The resistance line around $12.35 that contained Crown for much of the early part of this year also represents a threat. The next step would be to see that comfortably cleared as well.