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Technical update: 19 March 2018

Violeta Todorova

Wesfarmers (WES) – approaching resistance

In our last update on February 12, 2018 we discussed the likelihood of the price bouncing in the near term and recommend clients accumulate the stock around $40.00. Friday's price action strongly bounced up and has approached its band of resistance between $45.00 and $46.00. Given the proximity to its band of resistance and the overbought readings of the RSI indicator, we are of the view that the long term trading range will stay intact and that the near term upside from here is likely to be limited. 

Active traders may consider trimming positions around $45.00.

Telstra Corporation (TLS) – short term bounce

The down trend from the July 2016 high has lost momentum over the past four months. A bullish divergence between the price and the RSI indicator has formed on the daily chart, showing that the down trend is losing momentum. Although at this point there is no reversal signal of the primary down trend, given the loss of downside momentum, we see a good probability of the price bouncing in the near term. 

The first potential upside price target is $3.50, followed by $3.70 in the months ahead.

PWR Holdings Group (PWH) – tactical buy

The up trend from the August 2017 low has lost momentum over the past three months and the price has been trading sideways, fluctuating between $2.28 and $2.71. The current short term down swing has retraced to its support where initial buying interest is likely to arise. The stochastic indicator has turned positive from oversold territory, suggesting that the price is likely to bounce in the short term.

The first potential upside price target is $2.50 followed by $2.65.

GPT Group (GPT) – buy

GPT has been trading in a correction mode since December 2017 which is still technically intact. The price retraced to its band of support between $4.38 and $4.58, where initial buying interest is likely to arise. A small bullish divergence between the price and the RSI indicator has formed on the daily chart, suggesting that the price is likely to bounce soon. Given the proximity to its key band of support and the oversold and diverging momentum conditions, we are comfortable accumulating the stock around current price levels.

The potential medium term upside price target is $5.20.

Clean TeQ Holdings (CLQ) – tactical buy

The correction from the January 2018 high has lost momentum over the past month and the price has been trading sideways, fluctuating between $1.12 and $1.38. The MACD indicator has crossed from oversold territory suggesting that the price is likely to bounce in the near term. Given the loss of the downside momentum over the past month and the positive crossover of the MACD indicator we are of the view that the price could trade higher in the month(s) ahead.

The potential upside price target is $1.50.

More information

Morgans clients can login to 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.