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Technical analysis: 8 October 2018

Violeta Todorova

Crude Oil – target reached

In our last update on August 24, 2018 we discussed that support of US$63.40 is likely to hold and the price is likely to rally in the weeks ahead. A strong rally has unfolded over the past month and our initial upside price target of US$75.00 has now been reached. While we continue to be positive over the long term, the marginally higher highs show that the trend is getting tired. 

In the short term, oil is likely to pull back as the momentum indicators are in overbought territory. The initial downside target is US$69.00. We will update our long term target once the expected correction is complete as the magnitude of the retracement will determine the new potential upside price target.  

Coca-Cola Amatil (CCL) – approaching resistance

CCL has been trading in an up trend channel since November 2017 which is still technically intact. The current short term up swing has approached its channel line and is close to its key resistance of $10.87. The RSI indicator has reached overbought territory suggesting that the price is vulnerable to a pull back in the short term.

Given the proximity to resistance and the overbought momentum readings we are of the view that the near term upside from here is likely to be limited. Active traders may consider trimming their positions. 

Superloop (SLC) – approaching support

SLC has been trading sideways over the past five months, fluctuating between $1.89 and $2.60. The current down swing broke below support of $2.13 suggesting that the decline is likely to extend further in the very short term. The momentum indicators have reached oversold territory, suggesting that strong buying interest is likely to arise around key support of $1.89.

We would be looking to open long positions around $1.95 targeting a rally to $2.15.

The A2 Milk Company (A2M) – accumulate

A2M has been trading sideways over the past four months fluctuating between $9.19 and $11.91. The current short term down swing has approached its key support where buying interest is likely to arise. The RSI and the stochastic indicators have reached oversold territory suggesting that the price is likely to bounce soon. Given the proximity to key support and the oversold momentum readings we are comfortable accumulating the stock at current price levels.

The potential upside price target is $11.00.

Updater (UPD) – accumulate

UPD has been trading sideways over the past five months, fluctuating between $0.93 and $1.13. The current short term down swing has approached its support where buying interest is likely to arise. The RSI and the stochastic indicators have approached oversold territory suggesting that the price is likely to bounce soon.

The potential upside price target is $1.15 however the price may overshoot to $1.20. 

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.