Technical Analysis: 2 November 2018

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
02 November 2018, 8:27 AM

Lovisa (LOV) – double blessed buy

The primary up trend has lost momentum in August 2018 and the price has been trading in a downward trajectory since then. The correction has accelerated over the past three weeks and the downside price target of $7.35 based on the double top pattern has now been reached and exceeded.

The current correction retraced close to its 61.80% Fibonacci retracement ratio measured from the February 2016 low to the June 2018 top, crossing at $6.00, where support appears solid and is likely to hold. The daily and weekly RSI indicator has reached oversold territory suggesting that the price is likely to bounce in the short term.

The potential upside price target is $8.20. Given the proximity to potential Fibonacci support and the oversold momentum readings, we are comfortable to start accumulating the stock around current price levels. 

Adairs (ADH) – tactical buy

The up trend from the June 2017 low has lost momentum over the past month and the price has been trading in a downward trajectory. The correction retraced close to its 50.00% Fibonacci retracement ratio (measured from its June 2017 low to its September 2018 high) and to its previous support of $1.61 where initial buying interest is likely to arise.

The RSI and the MACD indicators have reached oversold territory suggesting that the price is likely to bounce in the short term. Thursday’s price action is a bullish outside reversal bar, engulfing the price action of the previous four days. This is a strong indication that sentiment is shifting.

The initial upside price target is $2.20, however this level could be exceeded. 

Orocobre (ORE) – tactical buy

ORE has been trading within the boundaries of a down trend channel over the past year. The latest short term down swing has retraced close to its previous support of $3.01 where strong buying interest is likely to arise. A large bullish divergence has formed between the price, the RSI and the stochastic indicators, suggesting that the price is likely to bounce in the near term.

The first potential upside price target is $4.50. Over the medium term, levels to $5.20 are easily achievable. 

Zip Co (Z1P) – tactical buy

Z1P has been trading sideways over the past year fluctuating between $0.75 and $1.34. The current short term pull back has retraced to its long term up trend line crossing at $0.90 where strong buying interest is likely to arise. The RSI and the MACD indicators are turning higher from oversold levels suggesting that the price is likely to bounce in the short term. A break above minor resistance of $0.97 is likely and will confirm that the correction is complete.

The initial upside price target based on the expected breakout is $1.05, however this level could be exceeded. 

Boral (BLD) – accumulate

BLD has been trading in a down trend since February 2018 which is still technically intact. The current short term down swing has retraced close to its support of $4.93 where initial buying interest is likely to arise. 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 $6.25. Over the medium term, higher price levels are achievable. 

More information

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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.

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