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Blog

Technical Analysis: 1 November 2018

Violeta Todorova

Crude Oil – target reached

In our last update on October 8, 2018 we discussed our concern about the marginally higher highs forming on the chart (showing that the primary up trend is getting tired) and the overbought nature on the commodity. We highlighted the likelihood of the price declining in the short term and our initial downside price target of US$69.00 has now been reached and exceeded.

The weekly momentum conditions have deteriorated, in particular the long term up trend line on the leading RSI indicator has been broken downwards and a top reversal pattern has been completed overnight. This suggests that, the price is likely to take a breather in the months ahead. As long as key support of US$63.40 holds we are of the view that oil will trade sideways and fluctuates between US$64.00 and US$72.00.

Should key support of US$63.40 get broken; this will signal a likely re-test of the long term up trend line crossing at US$58.00. In the short term, oil is approaching oversold levels suggesting that the price is likely to bounce soon.

The potential upside price target is US$71.00. 

Senex Energy (SXY) – short term bounce

In our last update on October 5, 2018 we discussed the likelihood of the price correcting in the short term and recommended clients trim positions at $0.53. The price declined 30% from its October peak of $0.535 to its recent low of $0.37 where dynamic support from the long term up trend line is likely to be encountered. The RSI and the MACD indicators have reached oversold territory suggesting that the price is likely to bounce in the short term.

Given the proximity to dynamic support and the oversold momentum conditions, we are comfortable to start accumulating the stock around current price levels.

The potential upside price target is $0.45. 

Sundance Energy (SEA) – double blessed buy

In our last update on October 11, 2018 we discussed the overbought nature of the stock and the likelihood of the price correcting in the short term.  The price declined almost 20% since our update bringing the RSI indicator to its bull market support. Given the proximity to oversold levels the price is likely to bounce soon.

The first potential upside price target is $0.09; however the price may overshoot to $0.10. 

Otto Energy (OEL) – accumulate

In our last update on October 11, 2018 we discussed the overbought nature of the stock and the likelihood of the price declining in the short term. A sharp pull back has unfolded over the past three weeks with the price declining with 41% over that period. The RSI and the MACD indicators have reached oversold territory suggesting that the price is likely to bounce in the short term.

The initial upside price target is $0.06. Over the long term, higher price levels are achievable. 

Emeco Holdings (EHL) – tactical buy

EHL has been trading in a primary up trend over the past year which now appears to be losing momentum. The recent break below support of $0.32 shows that momentum is deteriorating and the price is likely to take a breather in the months ahead. The RSI and the MACD indicators have reached oversold territory, suggesting that the price is likely to bounce in the short term.

The initial upside price target is $0.32. 

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: 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.