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Technical analysis: 20 September 2018

Violeta Todorova

Fortescue Metals Group (FMG) – tactical buy

FMG has been trading in a down trend over the past year which is still technically intact. The weekly and daily RSI indicator has reached oversold territory suggesting that there is a good probability of the price rallying in the short term to unwind the oversold momentum conditions.

The initial upside price target is $4.20. Over the medium term, levels to $4.80 are achievable. 

Australian Finance Group (AFG) – double blessed buy

AFG has been trading within the boundaries of an up trend channel over the past three months which is still technically intact. The recent short term down swing has retraced to its up trend line crossing at $1.55 where initial support is likely to hold. The stochastic indicator is turning positive from oversold territory suggesting that the price is likely to bounce in the near term.

The initial upside price target is $1.79. We are comfortable to accumulate the stock at current price levels. 

Bellamy's Australia (BAL) – tactical buy

In our last update on August 31, 2018 we discussed the overbought nature of the stock and the likelihood of the price declining in the short term. The current pull back has retraced to its previous support/resistance level of $9.00 where buying interest is likely to arise. The stochastic indicator has reached oversold territory suggesting that the price is likely to bounce in the short term.

The initial upside price target is $12.00. Over the medium term, levels to $15.00 are achievable. 

Adairs (ADH) – double blessed buy

ADH has been trading in a strong up trend since June 2017 which is still firmly intact. The current short term pull back has retraced to its long term up trend line crossing at $2.20 where buying support is likely to arise. The RSI indicator has approached oversold territory suggesting that the price is likely to bounce soon.

The initial upside target is $2.60 however the momentum conditions are still strong and the price may overshoot. 

Costa Group Holdings (CGC) – tactical buy

CGC has enjoyed a very strong run over the past two years posting a record high of $9.04 in June 2018. After such an extended rally the stock took a breather over the past three months and the price corrected in a 3 wave fashion. The RSI and the MACD indicators have reached oversold territory suggesting that the correction is near completion. The current down swing (wave 3) has clearly lost momentum over the past week and we see a good probability of the price bouncing in the short term.

The initial upside price target is $7.50 however this level could be exceeded. 

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.