Technical Analysis: 26 February 2021

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
26 February 2021, 4:00 PM

S&P/ASX 200

XJO has been trading in a consistent secondary up trend since March 2020 which is still technically intact.

A large bearish divergence between the price and the RSI indicator has formed on the daily chart, showing that momentum is slowing down.

Despite the deterioration in the momentum conditions, the key support of 6,517 still holds and the RSI bull market support is still intact.

The weekly RSI and MACD indicators are overbought showing that the index might run out of steam soon, however before 6,517 is broken, we cannot declare that a deeper pull back is taking place.

AUD/USD

The AUD/USD has been trading in a strong secondary up trend since March 2020 which is still technically intact.

The current rally accelerated over the past three weeks and our upside price target of 0.81 has almost been reached.

While our long-term view continues to be positive given the improvement in the monthly momentum conditions, we not that the Aussie is approaching a band of static and dynamic resistance between 0.815 and 0.84, where initial selling pressure could arise.

The weekly and daily momentum indicators have reached overbought territory suggesting that a short-term pull back to unwind the overbought momentum conditions is likely before the secondary up trend resumes its upward trajectory.

Copper

Copper has been trading in a strong secondary up trend since March 2020 which is still firmly intact.

The rally accelerated over the past month and our latest upside price target of US$3.90 has now been reached and exceeded.

While the red metal reached overbought levels and a pull back is likely to unfold in the short-term, we note significant improvement in the monthly momentum conditions, which points to likely higher prices over the long-term.

We are of the view that the bull trend is likely to continue in the months ahead and we lift our upside price target to US$4.65.

Nickel

In our last update on the 7th of August we discussed the bullish outlook for the metal and the highlighted the likelihood of the price trading to US$18,000 in the months ahead.

A strong rally has unfolded as expected and our price target has now been reached and exceeded.

The weekly and daily momentum indicators have reached overbought territory suggesting that the commodity is likely to pull back in the short-term.

We note an improvement in the monthly momentum conditions over the past month and we are of the view that the rally is likely to extend further over the medium to long-term.

Given the improvement in the monthly momentum conditions, we lift our price target to US$21,000.

Spot Gold

After reaching an all-time high of US$2,074 in August 2020 and strongly overbought momentum conditions a pull back has taken place which is still technically intact.

While support of US$1,764 still holds we note a deterioration in the weekly RSI indicator which is a warning that the correction is likely to extend further.

A break below support of US$1,764 would confirm this view and is likely to trigger further weakness to the channel line crossing at US$1,700 where initial support is likely to arise.

We will monitor the price action closely in the weeks ahead, as further deterioration in the weekly momentum conditions would have negative implications for the price over the medium-term.

Find out more

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 would like access or more information, please contact your adviser or nearest Morgans office. 

Request a call  Find local branch

Need access to our research?

You are also welcome to start a two-week trial of our online platform, which provides access to detailed market analysis and insights, provided by our award-winning research team

Create trial account 

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.

  • Print this page
  • Copy Link