Technical analysis: 8 October 2020

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
08 October 2020, 3:00 PM

Wesfarmers (WES) – Heading higher

Wesfarmers (ASX:WES) has been trading in a strong secondary up trend since March 2020 which is still technically intact.

The pull back from the August 2020 high has lost momentum over the past two weeks and a higher low has formed on the daily chart, showing that the buyers are stepping in.

The RSI indicator completed a bottom reversal pattern from oversold territory suggesting that higher prices are likely to unfold in the coming weeks.

A decisive break above $46.00 is likely to occur and would signal that the correction from the August high is over.

The potential upside price target based on the anticipated breakout is $49.00.

JB Hi-Fi (JBH) – Improvement in momentum

JB Hi-Fi (ASX:JBH) has been trading in a strong secondary up trend since March 2020 which is still technically intact.

The pull back from the August 2020 high has lost momentum over the past month and the price has been trading sideways, fluctuating between $45.91 and $48.91.

The leading RSI indicator has completed a double bottom pattern from oversold territory, showing that momentum is improving and suggesting that higher prices are likely to unfold in the coming weeks. A decisive break above minor resistance of $48.91 is likely which would signal that the correction is over.

The potential upside price target based on the expected breakout is $52.50.

Motorcycle Holdings (MTO) – Lifting our target

In our last update on the 20th of August 2020 we highlighted the strength of the momentum indicators and we released a high conviction buy note before the price broke above resistance of $1.84, which in our view was likely to trigger higher prices in the near-term.

A strong rally has unfolded over the past month and our price target of $2.40 has now been reached.

Tuesday’s price action breached above its key resistance of $2.51 showing that buying interest is growing.

The long-term down trend line has been broken upwards suggesting that the primary down trend is likely to be turning the corner.

An imperfect ascending triangle pattern was confirmed on the daily price chart pointing to higher prices over the medium-term. Given the improvement in the price structure, we lift our price target to $3.00.

Super retail Group (SUL) – Lifting our target

In our last update on the 3rd of August we discussed the implications from the breakout above resistance of $8.85, the breakout in the RSI indicator and the likelihood of the price trading higher in the months ahead.

A strong rally has unfolded throughout August and our price target of $10.40 has now been reached and exceeded. Wednesday’s price action broke on an intra-day basis above resistance of $11.26 showing that buying interest started building up after a month of consolidation.

The RSI indicator remains firmly in its bull market range (above 40%) and has completed a bottom reversal pattern from oversold levels.

All these developments in the price and in the RSI indicator sub-chart are bullish and suggest that higher prices are likely to unfold in the weeks ahead.

A decisive break on a closing basis above resistance of $11.26 is likely to follow, which would confirm a rectangle continuation pattern. The potential upside price target based on the breakout is $12.50.

Damstra Holdings (DTC) – Bullish breakout

Damstra Holdings (ASX:DTC) has been trading in a strong secondary up trend since March 2020 which is still technically intact.

The price remains above its medium-term up trend line showing that momentum is still strong.

The RSI indicator is firmly in its bull market range over the past six months showing that higher prices are likely to unfold in the near-term.

Wednesday’s price action broke above resistance of $2.10 and has confirmed a continuation rectangle pattern.

The first potential upside price target based on the breakout is $2.40. Over the long-term, higher price levels are achievable.

More information

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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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