Technical update: 4 September 2017

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
04 September 2017, 10:10 AM

Treasury Wine Estates (TWE) – take profits

In our last update on August 18, 2017 we discussed the bullish nature of the breakout and recommended clients buy the stock at $12.96. A strong rally has unfolded over the past weeks and our upside price target at $14.50 has now been reached. While we continue to like the stock over the long term, the RSI and the MACD indicators have reached overbought territory, suggesting that the price is vulnerable to a pull back in the short term. Therefore, we recommend active clients take profits.

The trade delivered 11.8% gains in 11 trading sessions.

Inghams (ING) – target reached

In our last update on August 24, 2017 we discussed the bullish nature of the breakout and recommended clients buy the stock at $3.42. A fast rally has unfolded over the past week and our initial upside price target of $3.70 has now been reached and exceeded. While we do continue to like the stock over the long term and we see levels towards $3.94 as achievable, in the short term the momentum indicators are in overbought territory, which suggests that the stock is vulnerable to a pull back.

Orora (ORA) – target reached

In our last update on June 30, 2017 we discussed the bullish nature of the breakout but expected short term weakness and recommended clients buy the stock at $2.80. The price declined to $2.73 and provided a great buying opportunity. ORA enjoyed a great run over the past few weeks with recent price action re-visiting its key resistance of $3.19, exceeding our medium term price target of $3.10. The RSI indicator has completed a small top reversal pattern and the MACD indicator is in strongly overbought territory. This suggests that the near term upside from here is likely to be limited and that the price is vulnerable to a pull back.

Given the proximity to the top of its trading range and the overbought and diverging (stochastic) momentum conditions, we are of the view that resistance of $3.19 is likely to hold.

Qantas Airways (QAN) – at key resistance

QAN has enjoyed a strong run over the past year with recent price action re-visiting its all-time high of $6.06. A large triple bearish divergence between the price and the RSI indicator has formed on the daily chart, showing that the up trend is losing momentum and is likely to take a breather. The weekly momentum indicators are overbought and the RSI is close to completing a failure swing point. Given the proximity to its key resistance and the overbought and diverging momentum conditions, we see a potential for a pull back from here.

The initial downside price target is $5.30.

GrainCorp (GNC) – buy

GNC has been trading in a correction mode since June 2017 which now appears to be losing momentum. Bullish divergences between the price, the RSI and the MACD indicators have formed on the daily chart, showing that the correction is losing momentum. The lower highs are only marginally lower showing that buying interest has emerged. The weekly momentum indicators are turning positive from oversold territory, therefore we see a good probability of the price trading higher in the months ahead. A break above minor resistance of $8.92 is likely and will trigger a rally to $9.50.

Over the long term, higher price levels are achievable.

More information

Morgans clients can login to access all recent technical analysis on companies we cover. If you are interested in finding out more, please contact your nearest Morgans office.

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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