Technical update: 12 May 2017

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
12 May 2017, 2:39 PM

Flight Centre (FLT) – overbought

FLT rebounded strongly over the past month advancing from a low of $28.01 to a high of $37.38 on Wednesday. The RSI and the MACD indicators have reached overbought territory, suggesting that the price is likely to pull back in the short term. The potential downside price target is $33.50.

Over the medium term, we see a good probability the price will continue to trade sideways, therefore we rate the stock a hold.

Aveo Group (AOG) – double blessed buy

AOG has been trading sideways over the past three months fluctuating between $3.08 and $3.44. The current price action is trading in a narrow range just above key support of $3.08, building a small base. A break above minor resistance of $3.21 is likely and will trigger a rally in the near term.

The first potential upside price target based on the breakout is $3.40. Over the medium term, levels towards $3.60 are achievable. The current price levels present a good buying opportunity.

Primary Health Care (PRY) – target reached

In our update on May 5, 2017 we discussed the bullish nature of the ascending triangle and the likelihood of the price advancing to $3.90. A strong run has unfolded over the past week and our initial upside price target of $3.90 has now been reached. While the price can increase further to around $4.20 in the months ahead, this level is a strong resistance and the price is likely to meet solid selling pressure.

In the short term, the stock is overbought on a stochastic and RSI basis, therefore we recommend active clients to start trimming positions.

Australian Agricultural Company (AAC) – buy on weakness

The down trend from the July 2016 high has lost momentum over the past two months and the price rebounded strongly from $1.38 to $1.84. Thursday's price action decisively broke above key resistance of $1.75 confirming an imperfect inverse head and shoulders pattern which has bullish implications over the medium term.

The potential upside price target based on the breakout is $2.05. Any short term weakness to unwind the overbought momentum conditions would provide a buying opportunity.

Magellan Financial Group (MFG) – double blessed buy

MFG has been trading in a recovery mode since November 2016 and the medium term up trend is still technically intact. The weekly RSI indicator broke above its key resistance and has moved from a sideways market range into a bull market range. This is a very positive development for the stock and suggests that the price is likely to trade higher in the months ahead. The first medium term upside price target is $27.50, however higher price levels are achievable.

In the very short term, the price may experience a mild pull back as the daily momentum indicators are in overbought territory. Any potential short term price weakness towards $24.50 would provide a great buying opportunity.

More information

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Disclaimer(s): Analyst may own shares in some or all of the companies mentioned.

The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents ("Morgans") do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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