Technical update: 27 November 2017

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
27 November 2017, 8:10 AM

Insurance Australia Group (IAG) – overbought

Despite showing weakness in late August 2017, the price rebounded quickly and managed to stage a strong rally over the past two months. Last week's price action posted a record high of $7.33, where short term resistance appears to be building up over the past few days. The RSI and the MACD indicators reached strongly overbought levels, suggesting that the short term up swing is running out of steam. Given the overbought momentum conditions we are of the view that a short term pull back may unfold soon.

Over the long term, we don't see a reversal of the primary up trend and we rate the stock a hold.

Aust Securities Exchange (ASX) – heading higher

ASX has been trading in a primary up trend over the past three years which is still technically intact. The up trend has lost momentum over the past few months and the price has been trading sideways, fluctuating within the boundaries of a bullish ascending triangle. Last week's price action broke above key resistance of $55.08, suggesting that higher price levels are likely to unfold over the medium term.

The potential upside price target in the months ahead is $57.50 - $58.00. In the short term the price may experience a mild pull back as the momentum indicators are overbought on a weekly and daily basis.

Liquefied Natural Gas (LNG) – high conviction buy

LNG has been trading in a down trend over the past two years which is still technically intact. The intermediate (secondary) down trend has lost momentum over the past two months and the price has been trading sideways, fluctuating within the boundaries of a bullish ascending triangle. This latest development in the price shows that buying support is building up and we see a very strong probability of the price breaking above its resistance of $0.54.

The potential upside price target based on the breakout is $0.60, however the price may overshoot. Given the reliability of the pattern we are comfortable buying the stock at $0.50 before the anticipated breakout occurs.

ResMed Inc (RMD) – short term weakness

RMD has been trading in a strong up trend over the past year, which is still firmly intact. The latest secondary up trend pushed the price into uncharted territory posting an all-time high of $11.30. A small bearish divergence between the price and the RSI indicator has formed on the daily chart, suggesting that the stock may experience a pull back in the short term.

Over the long term, we don't see a reversal of the primary up trend and such potential short price weakness would provide an opportunity to accumulate. 

Mineral Resources (MIN) – heading higher

MIN has been trading in a strong up trend over the past year, which is still technically intact. Friday's price action confirmed a small flag pattern suggesting that despite the overbought weekly momentum readings the price is likely to trade higher in the near term.

The initial upside price target based on the breakout if $21.50, however this level could be exceeded in the months ahead.

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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