Today’s blog will simply be a selection of charts which are showing interesting technical charts.
OZFOREX Group (OFX)
Capitol Health (CAJ)
Tabcorp Holdings (TAH)
The Australian sharemarket had another bearish day with the index losing one percent. In yesterday’s article I showed the index was trading at the support level of 5350 and that this would prove an important level for future price movements. Today’s losses resulted in the index penetrating this support level and closing at its lows and in the process forming a long bearish candle.
The 20 day moving average has crossed below the 50 day moving average which is another bearish signal. Looking forward it is possible that the bearish sentiment will continue and the next support level of 5120 comes into range. In my opinion the market is headed lower in the medium term. Any rise in prices is probably going to be met with resistance at the August pivot low of 5420.
At this stage I am staying clear of any long position trades on the Australian sharemarket and have therefore not provided any trade suggestions for specific shares.
Australian shares have fallen for the third day in a row. The technical’s show that the index fell straight through the support level of 5420 and closed at it’s low today of 5352. This level was the support low seen in April to June. If the price falls through this price level then it is likely to signal further weakness and the index could then begin to fall all the way down to the low’s seen in mid October.
In contrast the US markets are continuing it’s bullish run with the S&P500 index making a new high overnight. It is clear that the Australian market is trading independently of the larger US market and is failing to follow it’s lead. This may signal that investors and traders are bearish about Australian market conditions and see better value in other markets. A pull back in the S&P500 index is likely to be supported at the resistance level of 2020 points.
I am neutral at present and not entering any long trades on the Australian market until I see evidence of the support level at 5350 holding and retracing above 5420.
The Goldman Sachs Group, Inc. is global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals.
The chart below shows it’s share price over the past seven months. The downtrend was broken in mid June with prices consolidating above the 200 day moving average. Over the past fortnight the price has retraced to form a bullish wedge. Yesterday saw a bullish candle breakout from the wedge pattern. This is my signal to enter a long position trade.
On this setup I will look to go long at a price of $168.00 with a stop-loss under the wedge low of $166.00. My initial target will be the resistance high from March of $175.00.
Shares in the social media giant Facebook (FB) increased 4.6% at the close of trading on Tuesday. This increase was on the back of the announcement a PayPal head will join the company to head it’s messaging products division.
The share price below shows the recent price action with a strong breakout from recent congestion. The breakout occurred on relative strong volume which adds to the bulls conviction to rise the share price.
Traders can look at entering a long position with a target price close to the March high of $72.00. Stops can be placed under the most recent congestion low of $62.00.
General Motors Co. is an automobile company, which develops, manufactures and markets cars, trucks and parts worldwide.
The technical chart setup is detailed and explained below.
Technical Pattern: Inverse head and shoulders with prices trading above the 200 day moving average.
Signal: Breakout from neckline resistance three trading days ago. Friday’s candle shows a rejection of the neckline resistance which has now turned to support.
My Trade Strategy: to go long on the open of the market provided the price open’s above $36.00 with my stop loss just under the 200 day moving average (approx $35.20)
OZ Minerals Limited (OZL) is an Australian based mining company with a focus on copper. OZL owns and operates the Prominent copper-gold mine and the Carrapateena copper-gold mines in South Australia.
The daily chart below shows signs of the share price rebounding after an extended down trend. The price has formed a bottom reversal inverse head and shoulders pattern .The share price has been limited by resistance of $4.00 which has been tested on three occasions over the past three months. Tuesday saw a breakout above the resistance level with the share price closing at $4.08.
The other significant thing that happened was the price was able to close above the long term 200 day moving average which has started to move sideways after a long period of downward movement.
I have this on my watch list for a possible long position trade and will be interested to see how the price behaves from here. I will be looking for confirmation that the resistance breakout is sustained with the 200 day moving average providing support now that it has broken to the upside.
It was all positive on Wall Street overnight with the Dow Jones Industrial Average hitting an intra-day all time high of 16,704 points. At the close of trading the Dow Jones had increased 0.68% (112 points) to close at 16,695 and breakout above December resistance which it had attempted to surpass over the past few months without success. Momentum could now continue to push the index forward to resume it’s up-trend so traders can look for opportunities in stocks that make up the Dow Jones Index. I was able to identify two such shares in Catepillar Inc and General Electric that show positive technical setup’s for long position trades.
Caterpillar Inc. (Caterpillar) is a manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. The stock price is in an up-trend with yesterday’s trading showing a triangle breakout. I will wait for confirmation of the breakout today and look to place an order to buy if the price can open above yesterdays low. The up-sloping trend line should offer support and seems a logical place for a stop-loss.
General Electric Company (GE) is a diversified technology and financial services company. The products and services of the Company range from aircraft engines, power generation, water processing, and household appliances to medical imaging, business and consumer financing and industrial products.
After a sell off in January the price has steadied and risen in an orderly up-trend. Recent price activity has resulted in some consolidation with a pending up-side breakout a possibility. If this does occur then the price could continue up-wards with a target of $28.00. At this stage I will wait for the box breakout to occur before committing to any long position trade.
The US markets enjoyed a bullish day on Wednesday with gains made in all the major indexes. The S&P500 gained over 1% and manged to bounce off the 1,840 support level I mentioned in yesterday’s blog. The S&P500 is currently trading in a range bound by support of 1,840 and resistance of 1,895.
The chart for Coca-Cola shows an ascending triangle with horizontal resistance at $39.00. For this set-up I will be watching for a breakout closing price above $39.00 to trigger my buy signal. If this occurs then I will be targeting a price of $41.00.
Eli-Lilly has been trading within a rectangular range bound by support at $57.00 and resistance of $60.00. Yesterday saw a breakout closing price above the $60.00 resistance level. I will look for confirmation of the breakout today with a second day close above $60.00.
AMP (AMP) is a listed company on the Australian Stock Exchange and provider of life insurance, superannuation, pensions and other financial services in Australia and New Zealand. AMP has a market capitalization of over $14 billion.
The chart below shows the 12 month price action. A short-term down trend was broken in late February with the subsequent formation of an ascending triangle with a horizontal resistance level of $5.10. On this setup I will be waiting for a resistance breakout and close above $5.10 to act as my trigger signal to go long (buy).
If the resistance breakout does occur then based on the measured moved theory the height of the triangle extrapolated from the resistance level provides a target level of $5.50.