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Technical Analysis: 28 September 2018

Violeta Todorova

Apollo Tourism & Leisure (ATL) – double blessed buy

ATL has been trading in a downward trajectory since February 2018 which is still technically intact. The latest down swing has retraced to its band of support between $1.21 and $1.27 where initial buying interest is likely to arise. The RSI indicator completed a bottom reversal pattern and the MACD indicator is turning from oversold territory, both suggesting that the price is likely to bounce in the near term.

The first potential upside price target is $1.60. Over the long term, higher price levels are achievable. 

Orocobre (ORE) – momentum improving

ORE has been trading in a down trend since January 2018 which is still technically intact. The medium term down trend line on the leading RSI indicator has been broken upwards, showing that momentum is improving. A bullish divergence between the RSI indicator has formed on the daily chart over the past month, suggesting that the down trend might be approaching a turning point.

A decisive break above minor resistance of $4.37 will confirm that a secondary up trend has started and will likely trigger a rally to $5.20 in the weeks ahead.

Ramsay Health Care (RHC) – not out of danger yet

RHC has been trading in a primary down trend over the past two years, declining from a high of $84.08 to a low of $53.01 posted in July 2018. While the latest secondary down trend has lost momentum over the past three months and the price has been trading sideways, we note that the RSI indicator remains firmly in the bear market range, which shows that selling pressure prevails. Given the current technical set up, we remain cautious and would want to draw investor's attention to support of $53.01 which, if broken, could send the price lower to $49.00 - $50.00.

We prefer exposure to RMD which is our top pick from the sector.

ResMed Inc (RMD) – steady as she goes

RMD has been trading in a strong primary up trend over the past three years which remains technically intact. The RSI indicator remains firmly in the bull market range at this stage, pointing to a higher prices over the medium term. The potential upside price target is $16.50.

Momentum indicators have approached overbought levels which points to a potential short term pull back. Given this we would not recommend buying at current price levels, but we are comfortable holders of the stock. 

CSL Ltd (CSL) – still strong but not cheap

CSL has been trading in a strong up trend over the past two years which remains technically intact. The current pull back has retraced to its medium term up trend line crossing at $200.00 where initial support is likely to hold. The daily momentum indicators have approached oversold territory, suggesting that a mild rebound from here could unfold in the near term. In the bigger picture, the weekly momentum indicators are still overbought (especially the MACD) which suggests that the current pull back might not be complete yet. Therefore, we cannot rule out a three wave decline unfolding in the month ahead.

Overall, while the primary bull trend is in play and we are happy holders, technically the stock does not appear to be cheap enough to upgrade to a buy at this stage.  

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.