Technical Analysis: 19 August 2019

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
19 August 2019, 4:10 PM

Telstra Corporation (TLS) – Deterioration in momentum

In our update on January 31, 2019 we discussed the likelihood of the price declining in the short term and recommended clients buy the stock around $3.00. The expected pull back has unfolded and provided a great buying opportunity.

A strong up trend has unfolded over the past seven months and our medium term upside price target of $3.60 has been reached and exceeded. Bearish divergences between the price and the RSI indicator have formed on the daily and weekly charts suggesting that the stock is likely to take a breather in the near term.

Friday’s price action broke below its support $3.71 adding further evidence the up trend is deteriorating. A break on a closing basis below $3.71 is likely and could trigger further weakness to $3.40.

Australian Securities Exchange (ASX) – Overbought 

ASX has been trading in a strong up trend since December 2018 which is still technically intact.

Bearish divergences between the price and the RSI indicator have formed on the daily and weekly chart showing that momentum is deteriorating.

A lower high has formed on the price chart suggesting that the sellers are stepping in.

The leading RSI indicator broke below its bull market support suggesting that the price is likely to break below its support of $82.73 and extend its decline to $76.00 in the months ahead.

Aristocrat Leisure (ALL) – Bearish breakout

ALL has been trading in a strong up trend since December 2018 and our price target of $30.00 has been reached and exceeded.

A lower high has formed on the chart recently showing that the selling pressure is growing.

The current downswing broke below support of $28.94 suggesting that a secondary correction is likely to unfold in the months ahead.

The potential downside price target based on the breakout is $26.50. 

 

 

The Star Entertainment Group (SGR) – Oversold 

SGR has been trading in a down trend since February 2018 which is still technically intact.

The weekly and daily momentum indicators have reached oversold territory suggesting that the price is likely to bounce in the short term.

The initial upside price target is $4.05 however this level could be exceeded.

Over the medium term, we don’t see a reversal of the down trend and at this point we only favour a bounce in the short term.

Origin Energy (ORG) – Accumulate

The bounce from the December 2018 low has lost momentum over the past three months and the price has been trading sideways, fluctuating between $6.84 and $8.05.

The current downswing is approaching support where initial buying interest is likely to arise.

The RSI indicator is approaching oversold territory suggesting that the price is likely to bounce soon.

While our ideal entry is in the low $6.00’s, we are comfortable to start accumulating around $6.80. The potential upside price target is $7.70. 

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: Analyst owns shares in: EFACustomAnalystPosn. 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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