RKT slides more than 2% as technical signals point to near-term weakness

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Reckitt benckiser slides 2.27% today

Highlights

Reckitt Benckiser finalized its £1 billion buyback, increasing treasury shares to nearly 39 million ahead of half-year results on July 29, 2024.
Recent trading updates show modest revenue gains in core markets, but Europe and North America face ongoing category weakness and geopolitical headwinds.
Technical signals flag strong bullish momentum with overbought conditions, while price consolidates near GBX4,995–5,094; the near-term trading range is GBX4,947–5,204.

Revenue gains offset by Europe, North America headwinds as results near

Reckitt Benckiser completed the final phase of its £1 billion share buyback, repurchasing over 11 million shares between March 9 and June 15, 2024. All acquired shares from this tranche are held in treasury, bringing treasury holdings to nearly 39 million as of July 1, 2024. The company is set to report half-year results on July 29, 2024, with recent updates highlighting modest revenue growth in core markets and ongoing challenges in Europe and North America. CEO Kris Licht reported that weak categories in Europe, low seasonal incidence, and geopolitical disruption influenced recent results, though price action has remained under broader selling pressure.

Anton Kharitonov, expert at Traders Union, notes the post-buyback decline in Reckitt Benckiser as a sign of persistent technical and sentiment weakness. He points to the reversal near key resistance despite recent bullish momentum and overbought signals from RSI and other oscillators. Kharitonov is cautious about the upcoming half-year results, especially given the modest revenue growth and regional challenges. He underscores the gap between short-term momentum and longer-term downside risk, particularly with price below its 200-day moving average. "Trader enthusiasm appears unsustainable at current levels, and I see heightened risk of further downside if GBX4,995 support breaks," Kharitonov warns.

Viktoras Karapetjanc, expert at Traders Union, views the end of the £1 billion buyback as a foundation for ongoing investor confidence. He highlights that technical momentum remains constructive with prices above their 20-day and 50-day averages. Karapetjanc believes the market still presents significant opportunity as Reckitt Benckiser consolidates, awaiting catalysts from the upcoming earnings report. "With bullish structure intact and upward probabilities favored, I expect further growth if GBX5,094 is broken decisively," Karapetjanc states.

Short-term bullish signals clash with long-term pressure and overbought risk

Reckitt Benckiser is trading above its 20-day and 50-day moving averages (GBX4,808 and GBX4,698 respectively), supporting short- and medium-term bullish momentum. However, it remains below the 200-day average at GBX5,707, reflecting ongoing long-term downside pressure. The nearest resistance is the near-term ceiling at GBX5,094, with immediate support at the near-term floor of GBX4,995. The Ichimoku Kijun (GBX4,557) signals prevailing longer-term support but is currently distant. Momentum indicators are mixed: both MACD and Awesome Oscillator show bullish signals, but the Average Directional Index (ADX) indicates a sell trend and weakening trend strength. The Relative Strength Index (RSI) is elevated at 74.21, while CCI and Stochastic RSI both point to strong overbought conditions. Bull/Bear Power (BBP) is firmly positive at 295.6, showing buyer dominance in intraday momentum, yet also reinforcing overbought risk. Price remains near its session low with notable intraday volatility, indicating short-term selling pressure and a pullback from recent highs. Daily momentum and intraday action are diverging, as oscillator readings remain bullish while the current session exhibits marked weakness.

Previously it was reported that Reckitt Benckiser demonstrated short- to medium-term technical strength following its share buyback program, while longer-term momentum remained subdued amid persistent selling pressure. The latest market action adds a new dimension as heightened overbought signals and increased intraday volatility raise the risk of further pullbacks, making the near-term floor at GBX4,995 a critical level for traders to monitor.

Source of Data: RKT Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

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