Technical Analysis: 12 October 2018

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
12 October 2018, 9:03 AM

Spot Gold – bullish breakout

In our last update on September 14, 2018 we discussed the bullish implications from the failure swing point forming on the weekly chart on the leading RSI indicator and highlighted that gold is likely to be at a turning point. Last night the price action broke above minor resistance of US$1214 as expected confirming that a bottom is now in place. The daily RSI indicator broke above its bear market resistance strengthening the implications from the breakout.

The initial upside price target is US$1260 however over the long term higher price levels are achievable. We have been buying SBM, EVN, RRL, SAR, OGC, NST, NCM, RSG and PRU over the past two weeks despite the general weakness in the Australian market and we will be monitoring closely how price action unfolds in the coming weeks.

Wesfarmers (WES) – target reached

In our last update on September 14, 2018 we discussed the likelihood of the price trading lower in the short term and recommended clients switch from WES into WOW. A consistent decline has unfolded over the past month and our price target of $48.50 has been reached and exceeded. WES declined 6.5% since our update while WOW gained 1.2%, so we are satisfied with the relative performance of our call.

The current correction is still in progress but is approaching its previous resistance of $45.60 where initial buying interest is likely to arise.

Fortescue Metals Group (FMG) – bullish double bottom

The decline from the February 2018 high has lost momentum over the past month and the price appears to have been in the process of forming a double bottom pattern. Thursday’s price action bounced strongly despite the bloodbath in our local and global markets giving us confidence that a bottom is in the making.

We have an open tactical buy at $3.79 with a price target of $4.20.  

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.

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