Technical update: 20 February 2018

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
20 February 2018, 2:06 PM

Baby Bunting Group (BBN) - double blessed buy

In our update on November 30, 2017 we discussed the likelihood of the price trading higher and recommended clients buy the stock at $1.42. While at this point there is no confirmation of reversal of the primary down trend, the higher low which formed on the daily chart on Friday is a very strong sign that buying interest is growing.

We see a high probability of resistance of $1.70 being broken upwards which will confirm that a new up trend is in place. We lift our medium term upside price target from $1.80 to $1.90.

South32 (S32) - losing momentum

In our last update on January 11, 2017 we discussed the overbought nature of the stock and closed our tactical buy position at $3.69. A small double top has established a week later and over the past three weeks the price has been trading in a downward trajectory. The leading RSI indicator has fallen below its bull market support (see blue line below), suggesting that the up trend is likely to be over. While the stock could bounce in the short term to unwind its oversold momentum readings, we believe the price will take a breather in the months ahead.

Investors should keep an eye on key support of $3.15, as a break below this level will signal further weakness. 

GrainCorp (GNC) - short term bounce

GNC has been trading in a down trend since June 2017 which is still technically intact. The recent pull back has retraced to its key support of $7.19 where initial buying interest is likely to arise. The MACD indicator is turning up from oversold territory, suggesting that the price is likely to rise in the near term.

The first potential upside price target is $8.10, however the price may overshoot to $8.40. 

Domino's Pizza (DMP) - buy around $41.00

The down trend from the August 2016 high has lost momentum over the past six months and the price has been trading sideways, fluctuating between $39.50 and $50.00. The current short term down swing is approaching its band of support between $39.50 and $40.05 where strong buying interest is likely to arise. The RSI and the stochastic indicators are approaching oversold territory suggesting that the price is likely to bounce soon.

The initial upside price target is $46.00. Over the medium term, levels to $49.00 are achievable. 

Novonix (NVX) - buy

NVX has been trading in a down trend since October 2017 which is still technically intact. The current down swing has retraced to its key support of $0.70 where initial buying interest is likely to arise. The RSI and the MACD indicators have posted bullish divergences on the daily chart, suggesting that the price is likely to bounce in the short term. Given the proximity to key support and the oversold and diverging momentum conditions we are comfortable to start accumulating the stock around current price levels.

The potential upside price target is $1.00. 

More information

Morgans clients can login to access my full report or view all recent technical analysis on companies we cover by browsing the research section and filtering by 'technical analysis' in the Market Updates section. 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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