This story features ANZ GROUP HOLDINGS LIMITED. For more info SHARE ANALYSIS: ANZ
Bottom Line 27/07/16
Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Support Levels: $24.20 – $23.86 / $22.66 – $21.86
Resistance Levels: $26.35 / $29.17 / $31.13
Technical Discussion
ANZ Bank ((ANZ)) is one of Australia's "Big 4" offering a range of banking and financial products to retail, corporate and institutional clients. Whilst ANZ is best known in Australia and New Zealand, it has a significant business in Asia. In July 2014 the company completed the sale of ANZ Trustees Ltd to Equity Trustees Ltd. For the year ending the 30th of September 2015 interest income increased 3% to A$30.53B. Net interest income after loan loss provision increased 5% to A$13.44B. Net income applicable to shareholders increased 3% to A$7.49B. Broker/Analyst consensus is currently “Hold”. The company pays a dividend of 7.1%.
Reasons to be cautious:
→ Management focusing on returns as opposed to growth.
→ Asia slowing could be problematic, especially if U.S rates rise.
→ Ongoing capital management is expected.
→ Trading profits will be adversely affected during any sustained correction.
→ Recent weakness may be overdone short term.
The banks have been looking weak for several months now with no great reason to want to be involved. The tide has turned slightly although more confirmation is required regarding a turnaround over the coming weeks before getting overly confident that a decent leg higher is in its early stages. On the positive side of things, we were focusing on a large symmetrical triangle during our last review and with the prior trend being down, there was the possibility of seeing further weakness. However, as can be seen here the lower boundary of the structure was tagged and rejected pretty much immediately from where price has rallied hard in an impulsive movement.
The upper boundary of the triangle has now been overcome which is what’s opened the door for something a little more bullish to unfold. That said, though the breakout has transpired volume has slowly been declining during recent strength which is the exact opposite of what should be unfolding if a sustainable movement north was in its early stages. We could also view the price action from January this year as a basing pattern which will certainly be the headline pattern should price fail to get on with the job here on in. Not that this would be a bearish proposition but it would mean several weeks, and likely months of more sideways choppy price action to come. Should price remain in the trading range we’ll have to wait until the prior pivot high at $26.35 is penetrated before siding more with the Bulls. In summary, the push out of the triangle is a small step in the right direction but the sector and therefore ANZ still have headwinds to overcome.
Trading Strategy
Had the prior trend been to the upside I’d have been more than happy to put forward a formal recommendation though this clearly isn’t the case. However, if you are a little more aggressive and want to dip your toes into the sector then a low risk entry is presenting itself. Buy following a push up through the recent pivot high at $25.99 with the initial stop set at $23.85 which is the 61.8% retracement level of the recent leg higher. The target zone is the 50% – 61.8% retracement zone of the whole prior leg down off the April 2015 highs sitting between $31.13 – $32.57 which provides a decent risk-adjusted trade.
Re-published with permission of the publisher. www.thechartist.com.au All copyright remains with the publisher. The above views expressed are not by association FNArena's (see our disclaimer).
Risk Disclosure Statement
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