Technical analysis: 28 May 2020

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
28 May 2020, 1:15 PM

Commonwealth Bank of Australia (CBA) – Improvement in momentum

In our last update on March 20, 2020 we discussed that the stock is oversold on a short, medium and long term basis and highlighted that the stock is likely to rebound from its March low. The price traded in a narrow range over the past month with Wednesday’s price action finally breaking above its minor resistance of $62.93. The RSI indicator broke above its resistance of 51% and shows that momentum is improving. The breakout has an impulsive nature and we are of the view that the price is likely to continue to trade higher in the near term.

A re-test of $68.18 is likely in the short term, which is the first important overhead resistance from here. This level is likely to be broken upwards and at this point our upside price target of $72.00 remains unchanged.

Westpac Banking Corp (WBC) – Bullish breakout

In our last update on March 20, 2020 we discussed the oversold nature of the stock and highlighted that the bullish divergence between the price and the RSI indicator points to a likely rebound in the near term. The last two days posted an impulsive move on the chart and our initial upside price target of $18.00 has now been reached. The weekly RSI indicator has turned higher from oversold territory and we are of the view that the positive momentum is likely to continue in the near term.

Wednesday’s price action broke above minor resistance of $17.59 suggesting that a secondary bottom is now in place. The next potential upside price target is $20.00 however this level could be exceeded.

ANZ Banking Group (ANZ) – Bullish breakout

In our last update on March 20, 2020 we discussed the oversold nature of the stock on a monthly, weekly and daily basis and the likelihood of the price rebounding in the near term. After its initial bounce to our price target of $18.00 the price lost momentum and traded sideways over the past two months. The last two trading bars have formed an impulsive move higher and the previous resistance of $18.02 has been broken yesterday, Wednesday, May 27, 2020. The breakout has bullish implications and suggests that the stock is likely to trade higher in the coming month(s).

The weekly RSI indicator has turned higher from oversold territory and supports our positive view on the stock. The next potential upside price target is $20.00, however this level could be exceeded.

National Australia Bank (NAB) – Bullish breakout

In our last update on March 20, 2020 we discussed the oversold nature of the stock on a short, medium and long term basis and the likelihood of the price rebounding in the near term. After its initial bounce the price lost momentum and traded sideways over the past two months. The stock bounced strongly over the past two days, breaking above its previous resistance of $17.52, confirming that a secondary bottom is now in place.

The weekly RSI indicator rose above 30% yesterday showing that the price is likely to trade higher. Given the improvement in the momentum conditions and in the price structure, we lift our price target to $20.00.

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 may own shares. 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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