Technical Analysis: 21 January 2019

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
21 January 2019, 12:38 PM

Woolworths (WOW) – approaching resistance

WOW has been trading in an upward trajectory since October 2018 which is still technically intact. Last weeks price action broke above resistance of $29.93 suggesting that higher prices are likely to unfold in the near term.

The RSI indicator is approaching overbought territory, therefore we are of the view that the current rally could extend to $31.10 - $31.40, where selling pressure is likely to arise.

Sydney Airport (SYD) – approaching support

In our last update on October 18, 2018 we discussed that support of $6.31 is likely to hold, that the price would rally in the near term and recommended clients buy the stock at $6.64. A strong rally has unfolded throughout November and December 2018 and our initial upside price target of $7.00 was reached in December 2018. Over the past month the stock has been trading in a correction mode and the current price action is approaching its support of $6.24 where initial buying interest is likely to arise.

The RSI indicator is approaching oversold territory, suggesting that the price is likely to bounce soon. We would be looking to accumulate the stock around $6.30. The potential upside price target is $6.90.

Reliance Worldwide (RWC) – bullish divergence

In our last update on October 4, 2018 we discussed the oversold nature of the stock and the likelihood of support of $5.03 holding. The bounce that we expected did not reach our price target of $5.70 and the price kept falling over the past three months. So far the momentum conditions still remain poor and the stock did not join the overall market rebound in January 2019.

While at this point there is no sign of a reversal of the down trend which started in August 2018, we note that the down trend is posting only marginally lower lows, which is an encouraging sign. A large bullish divergence between the price and the RSI indicator has formed on the daily chart suggesting that the price is likely to bounce soon. We continue to hold our long position.

Lovisa (LOV) – closing our tactical buy

In our last update on January 3, 2019 we discussed the oversold and diverging momentum conditions and the likelihood of the price bouncing in the short term. We opened a tactical buy at $6.22 and our initial price target of $7.00 has now been reached.

While the current rally could extend further to $7.50 and the stock still looks cheap on a long term basis, we would use any further strength from here to close our tactical buy, which was a short term call only.

Cleanaway Waste Management (CWY) – close to target

In our last update on November 23, 2018 we discussed the likelihood of the price bouncing in the near term and recommended clients buy the stock at $1.74. A strong rally has unfolded over the past month and the current price action is close to our initial price target of $1.90.

While at this point there is no sign that the current rally is over, we note that the RSI indicator is approaching overbought territory. We will use any further strength from here to trim our long positions.

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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