How low can WiseTech shares go?

The WiseTech Global Ltd (ASX: WTC) share price is under pressure once again on Monday.

At the time of writing, WiseTech shares are down 5.03% to $45.15. That leaves the stock trading near its recent lows and well below where it stood this time last year.

After such a dramatic fall, investors may be wondering just how low WiseTech shares could go from here.

A steep decline from peak levels

It has been a brutal 12 months for this former market darling.

WiseTech shares reached a 52-week high of $121.31 in July last year. Today, they are trading more than 60% below that peak.

The stock recently fell to as low as $40.59 on 13 February before staging a modest rebound. Even so, the broader trend remains firmly downward.

From a technical perspective, WiseTech is still making lower highs and lower lows, which is the textbook definition of a downtrend.

Where is support?

The $40 to $41 region is now the key level to watch. That marked the February low and is the closest clear area of support on the chart.

If that level fails, there is little obvious historical support until the mid $30’s, which acted as a consolidation zone back in 2022.

On the upside, the $50 level now shapes as near-term resistance. The shares have repeatedly struggled to reclaim that area in recent weeks. Above that, the $60 zone could present the next hurdle, having previously acted as support before breaking down.

What do the technical indicators show?

Momentum indicators suggest the sellers still have the upper hand.

The relative strength index (RSI) is sitting around 38. That is not yet in deeply oversold territory below 30, but it does indicate weak momentum and limited buying pressure.

Meanwhile, the share price is trading close to the lower Bollinger Band. While this can sometimes signal that a stock is stretched in the short term, shares can continue to track the lower band for extended periods during strong downtrends.

Do brokers see value at these levels?

Despite the sharp decline, some brokers remain constructive on the long-term outlook.

UBS recently reiterated its buy rating with a price target of $89. That implies potential upside of close to 100% from current levels, assuming its growth and margin assumptions are met.

Bell Potter has also retained a buy recommendation, though it trimmed its price target to $83.75. Even at that lower target, the broker sees material upside from the current share price.

However, it is worth noting that price targets have been progressively reduced over recent months as earnings expectations have been revised.

So how low can it go?

Technically, as long as WiseTech shares remain below key resistance levels and continue to trend lower, the risk of another leg down cannot be ruled out.

A decisive break below $40 could open the door to a move into the mid $30s. On the other hand, a sustained move back above $50 would be the first sign that selling pressure is easing.

At this stage, the chart continues to favour a cautious approach. Longer term, however, brokers clearly believe the current weakness could present an opportunity for patient investors willing to tolerate volatility.

The post How low can WiseTech shares go? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.