Technical Analysis: 9 November 2020

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
09 November 2020, 3:51 PM

The A2 Milk Company (A2M) – Double Blessed Buy

After posting an all-time high of $20.05 in June 2020 the stock came under selling pressure and has been trading is a secondary down trend since. The recent down swing has retraced close to its November 2019 low of $11.28 which is a key support for the stock.

While the momentum conditions are still poor at this point, we note that bullish divergences between the price, the RSI and the MACD indicators have formed on the daily chart.

This is an early indication that the stock might be approaching an inflection point. Given the proximity to support and the oversold and diverging momentum conditions, we are comfortable to buy the stock around current price levels.

The first potential upside price target is $15.00, followed by $17.00 over the medium-term.

Lovisa (LOV) – Double Blessed Buy

LOV has been trading in a secondary up trend since March 2020 which is still technically intact. The current short-term pull back has retraced close to its previous support of $7.15 where buying interest is likely to arise.

The momentum conditions are gradually improving suggesting that higher prices are likely to unfold over the medium-term. The secondary up trend line is still intact and providing support, showing that the up trend is constructive.

Given the proximity to static and dynamic support and to oversold momentum readings, we see the current prices levels as attractive to buy the stock.

The initial upside price target is $9.50, followed by $10.50 over the medium-term.

Stavely Minerals (SVY) – Lifting our target

In our last update on the 21st of May 2020 we discussed the likelihood of the price being in the process of building a base and recommended clients buy the stock before an actual breakout from the ascending triangle occurs.

After the initial strong bounce which exceeded our initial upside price target of $0.70, the stock lost momentum and has been trading sideways over the past five months.

The current short-term up swing has broke above its multiple resistance of $0.78 showing that buying interest is building up. The leading RSI indicator has entered bull market territory suggesting that higher prices are likely to unfold in the coming months.

A decisive break above resistance of $0.78 would confirm a rectangle continuation pattern, which is likely to trigger an extension of the current up trend to $1.00.

West African Resources (WAF) - Buy

WAF has been trading in a primary up trend over the past four years, which is still firmly intact.

The recent pull back has retraced to its band of support between $0.87 and $0.97, where support appears solid and is likely to hold.

The price has built a small base over the past two weeks, suggesting that the correction is approaching completion.

The RSI indicator has formed a bottom reversal pattern from oversold territory, pointing to likely higher prices in the coming weeks. We are of the view that a break above minor resistance of $1.07 is highly likely, which could trigger a rally to $1.30. We see the current price levels presenting a good opportunity to buy the stock.

Perseus Mining (PRU) – Heading higher

PRU has been trading in a strong primary up trend over the past two years which is till firmly intact. After reaching a high of $1.66 in July 2020 the up trend has lost momentum and the price has been trading lower within the boundaries of a down trend channel.

The recent down swing has retraced to its channel line crossing at $1.20 where buying interest is likely to arise. The weekly RSI indicator has approached oversold territory suggesting that the correction is likely to reverse course soon.

While at this point there is no clear sign the correction is over, the current price set up suggests that the price is likely to be at a turning point. Therefore, we see any short-term price weakness from here as an opportunity to buy the stock.

The potential upside price target is $1.60. Our ideal entry is in the range between $1.20 and $1.30.

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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