Technical analysis: 7 May 2021

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
07 May 2021, 10:00 AM

Australian Ethical (AEF) – Lifting our target

In our update on the 25th of September 2020 we discussed large number of bullish developments on the daily and weekly charts and highlighted our high conviction the down trend is reversing course.

A strong rally has unfolded over the past few months and our medium-term upside price target of $8.00 has now been reached and exceeded.

The weekly and daily momentum indicators remain constructive and we continue to like the stock over the long-term.

We see levels to $10.50 as easily achievable. In the short-term, the price could take a breather as the momentum indicators have reached overbought levels and we note a bearish divergence forming on the chart.

Mainfreight (MFT) – Target reached

In our last update on the 30th of April 2021 we discussed the bullish implications from the breakout and the likelihood of the price trading higher in the short-term.

A strong rally has unfolded over the past week and our price target of $75.15 has now been reached. Over the long-term, we continue to like the stock and we are of the view that higher prices are likely to unfold in the months ahead.

The weekly and daily RSI indicator has reached overbought territory suggesting that the price is likely to pull back in the short-term. A potential decline to $70.00 - $71.00 would provide an opportunity to add to positions.

Strandline Resources (STA) – Double Blessed Buy

The up trend from the March 2020 low has lost momentum over the past nine months and the price has been trading sideways, fluctuating between $0.17 and $0.30.

The recent short-term down swing has retraced to its previous band of support between $0.17 and $0.19 where support appears solid and is likely to hold.

The RSI and the MACD indicators have turned up from oversold levels suggesting that higher prices are likely to unfold in the near-term.

Thursday’s price action broke above minor resistance of $0.21 confirming that a small bottom is in place and that the price is likely to rally.

The first potential upside price target based on the breakout is $0.24. Over the medium-term, levels to $0.29 are achievable.

The breakout provides confidence the correction is complete and we see the current price levels as attractive to buy the stock.

Seek (SEK) – Taking a breather

SEK has been trading in a strong secondary up trend since March 2020 which is still technically intact. The recent up swing has reached a fresh all-time high of $32.92 pushing the momentum indicators into overbought territory.

Small divergences between the price and the weekly and daily RSI indicator has formed recently showing that momentum is deteriorating.

A break below minor support of $29.72 would suggest that a small top is in place which is likely to trigger a pull back to $27.00.

While at this point there is no clear reversal signal of the primary up trend, given the deterioration in the weekly and daily momentum conditions, we are of the view that the up trend is likely to take a breather in the coming month(s).

IDP Education (IEL) - Accumulate

In our update on the 15th of February 2021 we discussed the overbought nature of the stock and the likelihood of the price declining in the short-term.

In a follow up update on the 12th of March 2021 we discussed that we see any further share price weakness in the range between $20.00 and $21.00 as an opportunity to buy the stock.

Yesterday’s price action entered our buy zone and despite the absence of a clear sign the correction is complete, we are comfortable to start accumulating the stock.

The RSI indicator has reached oversold levels suggesting that the stock is likely to bounce soon. The down swing is approaching a band of static and dynamic support and we are of the view the current decline will be arrested soon.

The first potential upside price target is $24.50.

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Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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