Nanosonics (NAN) – target reached
In our last update on August 6, 2016 we discussed the implications from the breakout above resistance of $3.35 and lifted our price target to $3.60. The price rallied over the past two weeks and our upside price target of $3.60 has almost been reached (on Wednesday the price posted a high of $3.54). A large bearish divergence between the price and the RSI indicator appears to be forming on the daily chart suggesting that the rally is likely to take a breather.
Given the proximity to key resistance (an all-time high) of $3.60 and the overbought and diverging momentum readings, we recommend clients trim positions.
Bellamy's Australia (BAL) – oversold
BAL has been trading in a down trend since March 2018 which is still technically intact. The current short term down swing has retraced to its previous resistance of $9.05 where initial buying interest is likely to arise. The RSI and the MACD indicators have reached strongly oversold territory suggesting that the price is likely to bounce in the short term.
The first potential upside price target is $12.50. Over the long term, levels to $18.00 are achievable.
Telstra Corporation (TLS) – heading higher
TLS has been trading in a steep down trend over the past three years which is still technically intact. The medium term down trend has been broken upwards recently showing that the secondary down trend is losing momentum. Thursday's price action broke above resistance of $2.98 suggesting that the rally from the June 2018 low is likely to extend further.
The initial upside price target based on the breakout is $3.30. Over the long term, higher prices are achievable.
Villa World (VLW) – building a base
VLW has been trading in a down trend since December 2017 which is still technically intact. the recent price action retraced to its key support of $2.05 which appears solid and is likely to hold. The medium term down trend line has been broken upwards recently showing that the down trend is losing momentum. A bullish divergence between the price and the RSI indicator has formed on the daily chart, suggesting that the price might be at a turning point. In our view, a break above resistance of $2.36 is likely and could trigger a rally to $2.55.
We are comfortable accumulating the stock around current price levels.
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Disclaimer: 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.