Technicals | Jan 28 2020
By Michael Gable
Uncertainty over the economic effects of the coronavirus will weigh on markets for this week. However, even if our market were to fall, say, 200 points from here, it still would look fine on a technical basis. We have made some great progress since the start of the year, so it's natural to get a dip along the way. It seems like the market was looking for an excuse. At the moment the effects of this virus are uncertain, and it is the uncertainty that gets investors worried. But a likely scenario to play out is that the spread of the virus starts to plateau, the Chinese government indicates that it will inject stimulus into their economy, global growth remains on track, and investors go back to focusing on the upcoming domestic reporting season. Things can get out of hand before they turn, so it would be prudent to keep a close eye on the price action in the next few days.
For this week's report our charting section provides an update on the chart of Commonwealth Bank ((CBA)).
CBA had spent the last six months consolidating in a triangular pattern. It has now broken free of that and should trend higher again. There will be some resistance near $87, but because it consolidated for such a long period of time, it is likely to get through $87 fairly quickly and attempt a retest of $90 before we need to reassess. Current levels are therefore a buying opportunity.
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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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