Technical Analysis: 11 February 2021

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
11 February 2021, 8:00 AM

Insurance Australia Group (IAG) – Building a base

The secondary down trend from the July 2019 high has lost momentum over the past four months and the price has been trading sideways, fluctuating within the boundaries of an imperfect ascending triangle.

The three higher lows on the daily chart are very encouraging sign and show that buying interest is building up. In our view a subsequent break above resistance of $5.50 is highly likely, which would confirm the bullish pattern.

The initial upside price target based on the breakout is $6.00, however over the longterm higher price levels are achievable.

Given the improvement of the price structure over the past four months, we are comfortable to buy the stock before an actual breakout occurs.

United Malt Group (UMG) - Accumulate

UMG has been trading sideways since listing in March 2020, fluctuating between $3.60 and $5.24. The current short-term down swing has retraced close to its band of support between $3.60 and $3.83 where buying interest is likely to arise.

The decline has clearly lost downside momentum over the past two weeks and the price has been in the process of building a small base.

The leading RSI indicator completed a bottom reversal pattern suggesting that the price is likely to follow suit.

We see a high probability of the price breaking above minor resistance of $4.17 in the short-term, which is likely to trigger a rally in the coming month(s).

The first potential upside price target is $4.40, followed by $4.65. Given the proximity to a band of support and the improvement in the momentum conditions we are comfortable to buy the stock around current price levels.

GrainCorp (GNC) – Breakout is imminent

GNC has been trading sideways over the past year fluctuating within the boundaries of an ascending triangle. The pattern has bullish prognosis and suggests that a break above key resistance of $4.65 is highly likely.

Wednesday’s price action breached this level and shows that buying interest is building up. A decisive break above this level appear imminent and is likely to trigger an impulsive rally out of the consolidation.

The first potential upside price target is $5.20, however over the long-term levels to $5.60 appear achievable.

Nufarm (NUF) – Lifting our target

In our last update on the 24th of September 2020 we discussed the likelihood of the price being in the process of building a base and we recommended clients buy the stock.

Initially the price has turned against us, but finally caught a bid in November 2020 and has been steadily trading upwards since then.

A large inverse head and shoulders was completed recently, and the RSI indicator has entered its bull market range for the first time in fourteen months.

The long-term down trend line has been broken upwards last month, adding further confidence in the reversal of the prior down trend.

The improvement in the price structure and in the momentum conditions is very encouraging and we are of the view that the price is likely to trade higher in the coming months.

Our first price target of $5.00 has now been reached and we lift our medium-term target from $5.15 to $5.60.

Dexus (DXS) – Accumulate

The decline from the February 2020 high has lost momentum over the past year and the price has been trading sideways, fluctuating between $8.03 and $10.25.

The current short-term down swing has retraced close to its band of support between $8.03 and $8.20 where strong buying interest is likely to arise.

The leading RSI indicator appears to be in the process of building a small base and we note the formation of a small bullish divergence with the price.

Given the proximity to its key support and the improvement in the momentum conditions, we are comfortable to buy the stock around current price levels.

The first potential upside price target is $9.50 followed by $10.00 in the coming months.

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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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