Technicals | Feb 05 2019
By Michael Gable
The market has drifted sideways in the last several days as the January rally starts to consolidate. Resources have done extremely well while banks have been sold down. We may see some consolidation in the bigger resource stocks, even though longer term they remain promising. The banks may find a little bit of buying support now, but we question whether there is much upside here beyond the next few days. In terms of this week's report, we look at ResMed ((RMD)).
When RMD got sold down a couple of weeks ago, it left a large bearish engulfing pattern (circled) on the weekly chart. Since then it has fallen towards trend-line support. Current prices also represent a 38.2% retracement of the 2016 – 2019 rally. So, current levels should offer some support for RMD. However, the severity of the recent sell-down means that the stock is unlikely to make much progress in the short term. We may see it spend several weeks or so around these levels before it is ready to head higher. Strong resistance will come in near $14. If current support levels fail, then the next support zone is just under $12.
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Michael is RG146 Accredited and holds the following formal qualifications:
• Bachelor of Engineering, Hons. (University of Sydney)
• Bachelor of Commerce (University of Sydney)
• Diploma of Mortgage Lending (Finsia)
• Diploma of Financial Services [Financial Planning] (Finsia)
• Completion of ASX Accredited Derivatives Adviser Levels 1 & 2
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