Technical analysis: 8 September 2020

About the author:

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

Commonwealth Bank (CBA)

After bottoming at $53.44 on the 23rd of March 2020 the stock has been trading in a recovery mode and has rebounded to a high of $76.75 in August 2020.

This level is a previous key support for the stock and is likely to act as a resistance in the near term.

The price retreated over the past three weeks and the current pull back has been the deepest since March, slightly breaking below its medium term down trend line.

The bull market support on the RSI indicator has been broken downwards showing that momentum has deteriorated.

This suggests that the rally from the March low is likely to take a breather and the price is likely to trade sideways in the coming month(s).

While the RSI indicator is approaching oversold levels, which suggests that the price is likely to rebound soon, given the deteriorating momentum conditions, we are of the view that such potential bounce is likely to be short lived.

ANZ Banking Group (ANZ)

The rebound from the May 2020 low has lost momentum over the past three months and the price has been trading sideways, fluctuating within the boundaries of an imperfect descending triangle.

The lower highs of the pattern show that selling pressure is building up and puts a question mark on the sustainability of the recovery from the March 2020 bottom.

The daily momentum indicators are in neutral territory, while the weekly readings are still firmly in the bear market range.

This suggests that despite the momentum being close to oversold territory, the primary down trend from the April 2015 high is not showing signs of a reversal yet.

Investors should keep an eye of support of $16.93 as a break below it is likely to trigger further weakness to $15.50.

National Australia Bank (NAB)

After bottoming at $13.20 on the 23rd of March 2020 the price rebounded and posted a high of $20.86 in June 2020, where strong selling pressure was encountered.

The recovery from the March 2020 low has lost momentum over the past three months and the price has been trading sideways within the boundaries of an imperfect bearish descending triangle pattern.

The daily and weekly momentum indicators remain weak suggesting that the primary down trend from the April 2015 high is still intact.

A break below minor support of $16.60 would signal an extension of the decline from the June 2020 high and is likely to trigger further weakness to $15.00.

Overall, while the stock is approaching oversold territory on a short term basis, the momentum indicators remain poor at this point and we favour further consolidation in the coming months.

Westpac Banking Corp (WBC)

The rebound from the March 2020 low has lost momentum over the past three months and the price has been trading sideways, fluctuating within the boundaries of an imperfect descending triangle.

The daily RSI indicator is in neutral territory while the weekly readings remain weak at this point.

The price action remains well below its medium term down trend line showing that selling pressure remains strong.

A subsequent break below minor support of $16.27 would signal an extension of the decline from the June 2020 high and could trigger further weakness to $15.00.

Overall, despite the proximity to oversold momentum levels on a daily basis, at this point we don’t see a reversal of the primary down trend and the price is likely to continue to trade sideways in the coming months.

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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