Technical Analysis: 4 September 2019

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
04 October 2019, 4:23 PM

S&P 500 – First target reached

In our last update on September 26, 2019 we highlighted that the index is likely to pull back in the short term, given the proximity to key resistance of 3,027, the overbought weekly and daily momentum conditions and the break below minor support of 2,978.

The selling pressure intensified over the past few days and our initial downside target of 2,850 has been reached overnight.

Thursday’s price action formed a bullish pin bar on the daily chart, suggesting that a mild rebound could be seen in the next few trading sessions.

Then another leg down is likely to unfold and re-visit key support of 2,822 which is an important level to watch.

The monthly and weekly momentum indicators remain overbought suggesting the correction is not complete yet.

We see a good probability of support of 2,822 being broken subsequently, which is likely to trigger an extension of the correction to 2,730.

S&P/ASX 200 (XJO) – Lower high in place

In our last update on September 26, 2019 we discussed the overbought momentum conditions and the likelihood of selling pressure arising around 6,875.

A lower high has formed in September showing that the secondary up trend is deteriorating.

The RSI indicator is now in a sideways market range (30% - 70%) suggesting that the up trend is likely to take a breather.

The two medium term up trend lines are now broken downwards (see red lines below) adding further evidence the up trend is losing momentum.

The weekly momentum indicators remain overbought, suggesting that the correction is not complete.

In the short term, the index is likely to rebound mildly before another leg down takes place.

A subsequent re-test of key support of 6,396 is likely which is an important level to watch, as it will determine the medium term outlook for the market.

Bega Cheese (BGA) – Short term weakness

BGA has been trading in a primary down trend since August 2018 which is still technically intact.

The recent short term up swing has lost momentum over the past two weeks with Thursday’s price action breaking below minor support of $4.51 suggesting that a short term top is in place.

The RSI and the MACD indicators are turning lower from overbought territory suggesting that the price is likely to pull back in the near term.

The potential downside price target is $4.00.

Flight Centre Travel (FLT) – At resistance

The down trend from the August 2018 high has lost momentum over the past five months and the price has been trading sideways, fluctuating between $37.59 and $50.11.

The current secondary rally has rebounded to its resistance where selling pressure is likely to arise.

Over the past month the price has been trading sideways and appears to be in the process of forming a small top.

A break below minor support of $46.08 is likely, which could trigger a pull back to $42.00.

IRESS (IRE) – Approaching support

In our last update on May 10, 2019 we discussed the overbought nature of the stock and the likelihood of the price taking a breather in the months ahead.

A strong decline has unfolded over the past five months with the current price action approaching its key support of $10.55 where initial buying interest is likely to arise.

While at this point there is no sign the correction is complete, the price declined 25% since its May high and we see the near term downside as limited.

We will keep a close eye on the stock and provide an update in due course.

We will be looking to accumulate around $10.50.

Cooper Energy (COE) – Accumulate.

COE has been trading in an up trend since February 2016 which is still technically intact.

The current pull back has retraced to its medium term up trend crossing at $0.54 where initial buying interest is likely to arise.

The RSI and the MACD indicators have reached oversold territory suggesting that the price is likely to bounce in the near term.

The initial upside price target is $0.62.

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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