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Technical update: 2 Feb 2018

Violeta Todorova

ANZ Banking Group (ANZ) – double blessed buy

The decline from the October 2017 high has lost momentum over the past two months and the price has been trading sideways within the boundaries of an ascending triangle. The pattern has bullish implications and suggests that higher prices are likely to unfold in the month(s) ahead. The stock goes ex-dividend in May 2018 and the next few months are generally seasonally strong for the share price. A break above resistance of $29.15 is highly likely and will trigger a rally to $30.50.

We are comfortable buying the stock at current prices.

National Australia Bank (NAB) – double blessed buy

The decline from the November 2017 high has lost momentum over the past two months and the price has been trading sideways, building a small base. The price retraced to its key support of $29.00 where strong buying interest is likely to arise. A bullish divergence between the price and the RSI indicator has formed on the daily chart suggesting that the price is likely to bounce soon. The stock goes ex-dividend in May 2018 and analysis shows that January/February are the months when the price starts rallying. Given the favourable seasonal factors, the proximity to key support and the overbought and diverging momentum conditions, we upgrade NAB to a high conviction buy. 

The first potential upside price target is $31.00. There is a good probability of a consistence up trend to unfold until the stock goes ex-div and we see a probability of the price reaching $32.00 by May 2018.

Westpac Banking Corp (WBC) – double blessed buy

The decline from the October 2017 high has lost momentum over the past month and the price appears to be finding buying support around its previous lows of $30.66. A bullish divergence between the price, the RSI and the MACD indicators has formed on the daily chart, suggesting that the price is likely to rally in the near term. Given the stock is entering a seasonally strong period we are expecting to see higher price levels unfolding in the month(s) ahead.

The potential upside price target is $33.00.

Commonwealth Bank (CBA) – range trading

The rally from the September 2017 low has lost momentum over the past two months and the price has been trading sideways, fluctuating between $78.00 and $82.88. The stock goes ex-dividend in February and usually the price trades sideways for two months afterwards. Given the strong seasonal factors in play we favour further consolidation between $78.00 and $83.00 in the months ahead.

We are happy to hold the stock and receive the upcoming dividend.

CYBG PLC (CYB) – taking a breather

CYB has been trading within the boundaries of an up trend channel since July 2016 which is still technically intact. The recent rally has lost momentum around its static (May 2016 high) and dynamic (up trend channel line) resistance crossing at $5.85. A bearish divergence between the price and the RSI indicator has formed on the daily chart, suggesting that the share price is likely to take a breather in the near term. Given the proximity to static and dynamic resistance and the diverging momentum conditions, we are of the view that the price will continue to trade sideways between $5.54 and $5.94 in the month ahead.

We will provide an update in due course once a breakout out of the current consolidation occurs.

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.