Technicals | Sep 28 2023
This story features ANZ GROUP HOLDINGS LIMITED, and other companies. For more info SHARE ANALYSIS: ANZ
Bottom Line 27/09/23
ANZ Bank ((ANZ))
Daily Trend: Down
Weekly Trend: Up
Monthly Trend: Up
Support Levels: $20.78 / $18.37 / $13.98
Resistance Levels: $26.08 / $29.40 / $32.68
Reasons to be cautious:
→ The institutional business looks to be performing well.
→ Investment in platform capabilities has resulted in market share gains.
→ There is plenty of competition from other retail banks as well as foreign banks and non-bank lenders.
→ There have been customer wins and recognition from surveys.
→ Investors are still wary of the industry and the sector.
The banks have been in the doldrums for more than a couple of years now. ANZ hasn’t been able to buck the trend. Off the high made in June 2021 choppy and messy price action has been the way forward. There have been trends along the way, but they haven’t been sustainable in either direction.
The rally off the lows made in June last year has been the most significant for a substantial period of time, yet it’s still not setting the world on fire. Over the past year, a sideways chop has been the main theme, albeit the stock is currently sitting around the upper boundary of that trading range. Something needs to change if a decent trend is going to unfold. What the trigger will be remains to be seen.
Despite what we’ve touched on above, it isn’t all doom and gloom. The banks are undoubtedly unloved and have been for some time, but that trait will change as it always does. Also, from a pure pattern perspective, there isn’t a great deal to worry about. We only need to look at our wave count to realise that.
We’ll take it from the high made in early 2015 which completed wave-(1) or-(A). It was followed by a zigzag into wave-(2) or-(B). It was a deep retracement which is always a reason for concern, yet the subsequent straight-line leg higher got the patterns back on track. If we fast forward, waves-1 and-2 are also in place, with the latter terminating smack bang in the middle of the 50% – 61.8% retracement zone. It’s about as textbook as you’ll see.
Now for the issue with the smaller degree patterns. If our labelling is correct, the strongest of all the impulsive waves within wave-3 should be unfolding. The emphasis is on “strongest”. We’d be hard push to suggest the rally off the low made in June last year has been strong and clean.
It’s clearly choppy and messy which is the concerning factor on this weekly chart. It’s early days so the patterns can get back on track but time is running out. Anything other than a strong impulsive leg higher over the coming weeks would suggest our wave count is incorrect. We’d then need to reassess, albeit it wouldn’t be for the better.
We are still holding a long position in Westpac ((WBC)), yet it continues to struggle, albeit it hasn’t been alone within the sector. We’ve had no inclination to add to that trade over the past few months and nothing has changed. With choppy and messy price action being the main theme in the banks, we’ll continue to leave well alone. They will trend at some point, but there’s no indication it’s going to be any time soon.
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