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Technical Analysis: 5 November 2018

Violeta Todorova

Wagners (WGN) – accumulate

The sell off from the October 2018 top accelerated last week and the current price action have approached its all-time low of $3.30, which is an important level to watch, as a break below it will have bearish implications. We are of the view that the current decline should be arrested soon as the RSI indicator has entered oversold territory.

The potential upside price target in the near term is $3.85. Given the recent deterioration in momentum conditions we are of the view that the stock is likely to trade sideways over the medium term. 

BHP Billiton (BHP) – approaching resistance

The up trend from the June 2017 low has lost momentum over the past five months and the price has been trading sideways, fluctuating between $30.70 and $35.68. The current up swing is approaching its resistance of $35.68 where profit taking is likely to take place in the near term. 

The RSI indicator is in a sideways market range (30% - 70%) and we favour further consolidation in the months ahead. 

Oil Search (OIL) – accumulate

The up trend from the July 2017 low has lost momentum over the past four months and the price has been trading sideways. The recent break below support of $8.32 confirmed a triple top pattern with a potential downside price target of $7.40, 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 soon. 

The potential upside price target is $8.30. 

Kidman Resources (KDR) – bullish breakout

KDR has been trading in a down trend since May 2018 which now appears to be reversing direction. Friday's price action broke above resistance of $1.26 suggesting that higher prices are likely to unfold over the medium term. The initial upside price target based on the breakout is $1.60.

The RSI is reaching overbought territory suggesting that a short term pull back is likely to take place soon. Such potential short term share price weakness would provide a buying opportunity for active traders. 

Wesfarmers (WES) – oversold

WES has been trading in a downward trajectory over the past two months which is still technically intact. The current price retraced to its previous resistance of $45.00 where buying interest is likely to arise. The RSI and the MACD indicators have reached oversold territory suggesting that the price is likely to bounce soon. The 61.80% Fibonacci retracement ratio measured from the June 2017 low to the August 2018 high highlights $44.60 as another potential level of support. Therefore we are of the view that the current decline is likely to be arrested soon.

The potential upside price target is $48.00. 

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.