Technical analysis: 25 May 2020
About the author:
- Author name:
- By Violeta Todorova
- Job title:
- Senior Technical Analyst
- Date posted:
- 26 May 2020, 11:45 AM
CSL Ltd (CSL) – Buy on weakness
The rally from the March 23, 2020 low rebounded close to its previous all-time high of $342.75 where resistance was encountered once again. Over the past month the price drifted lower consolidating within the boundaries of a descending triangle. Friday’s price action broke below minor support of $297.41 suggesting that the stock could trade lower in the coming weeks. While the stock is in accumulate territory at current price levels, our ideal buy entry is in the range between $270.00 and $275.00.
The momentum indicators are in neutral territory and we favour further consolidation in the coming months with strong support holding at $242.67 and resistance arising at $332.68.
Wesfarmers (WES) – Approaching overbought levels
The rally from the March 23, 2020 low has lost momentum over the past month and the price has been trading sideways within the boundaries of an ascending triangle pattern. Last week’s price action breached on an intra-day basis minor resistance of $38.73 suggesting that the rally is likely to extend further in the near term.
The initial upside price target is $41.00 - $42.00, where resistance is likely to arise as the momentum indicators are approaching overbought territory.
Woolworths (WOW) – Approaching support
The strong rebound from the March 13, 2020 low has lost momentum over the past two months and the price has been trading lower, posting consecutive lower highs. Friday's price action broke below minor support of $34.10 suggesting that the stock is likely to re-test its March lows of $32.02, where we would be looking to accumulate the stock. The weekly and daily momentum indicators are approaching oversold territory, suggesting that the down swing is likely to reverse direction soon.
Over the medium term, the price is likely to continue to trade sideways, fluctuating between $32.02 and $38.12.
TPG Telecom (TPM) – Approaching resistance
TPM has been trading sideways over the past year, fluctuating between $5.94 and $8.78. The rally from the March 24, 2020 low is approaching its band of resistance between $8.36 and $8.78 where initial selling pressure is likely to arise.
The RSI and the stochastic indicators have approached overbought territory suggesting that the near term upside from here is likely to be limited and that the price is vulnerable to a pull back in the short term.
Pact Group (PGH) – Approaching resistance
PGH has been trading in a down trend over the past two years, which is still technically intact. The rally from the March 2020 low has rebounded close to its long term down trend line crossing at $2.20, which is likely to act as a dynamic resistance for the stock.
The RSI indicator has reached overbought territory suggesting that the near term upside from here is likely to be limited and that the price is vulnerable to a pull back in the short term.
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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.