Technical analysis: 3 May 2021

About the author:

Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
03 May 2021, 10:05 AM

Insurance Australia Group (IAG) – Building a base

The down trend from the July 2019 high has clearly lost momentum over the past seven months and the price has been trading sideways, fluctuating between $4.30 and $5.50.

The rebound from the March 2021 low has slowed down and the price appears to have been in the process of building a small base over the past month. A subsequent break above minor resistance of $4.99 is highly likely in our view which could trigger a fast rally to $5.50.

Although at this point there is no sign suggesting the immediate reversal of the primary down trend, we have high conviction that the down trend has approached a turning point and is in the process of building a large base.

Over the long-term, levels to $6.00 are achievable. Any short-term share price weakness would provide an opportunity for patient investors to accumulate the stock.

Volpara (VHT) – Ready to bounce

VHT has been trading sideways over the past year fluctuating between $1.18 and $1.72.

The recent down swing has retraced close to its support where buying interest is likely to start building up in the short-term.

The RSI and the stochastic indicators have reached oversold territory suggesting that the price is likely to bounce in the short-term. The initial upside price target is $1.46.

A subsequent break above minor resistance of $1.46 is likely and could trigger an extension of the rally to $1.70. We see the current price levels as attractive to buy the stock.

Woolworths (WOW) – Approaching support

WOW has been trading in a secondary up trend since March 2020 which is still technically intact.

The current short-term correction has retraced to its dynamic support of $39.00 and is close to its previous static support of $38.32.

The RSI and the stochastic indicators have approached oversold levels suggesting that the down swing is likely to be arrested soon.

While at this point there is no sign the correction is reversing course and the decline could extend a bit further in the short-term, given the proximity to static and dynamic support, we are of the view that buying interest is likely to start building up soon. The potential upside price target is $42.50.

Lovisa (LOV) – Tracking well

LOV has been trading in a strong secondary up trend since March 2020 which is still technically intact. The up trend has lost momentum over the past two months and the price has been trading sideways, fluctuating between $13.26 and $16.58.

The correction is in time, rather than in price and is a good indication that buying interest is still strong.

The daily RSI indicator remains firmly in its bull market range showing that momentum is constructive and that higher prices are likely to unfold in the coming months.

A break above minor resistance of $15.75 is likely in our view, which could trigger an extension of the secondary up trend to new highs. The potential medium-term upside price target is $17.50.

HUB24 (HUB) – Target reached

In our last update on the 31st of March 2021 we discussed the proximity to key support of $19.09, the oversold momentum conditions and the likelihood of a strong rebound in the short-term and recommended clients buy the stock.

A strong rally has unfolded over the past month and our second upside price target of $27.00 has almost been reached.

The current up swing has re-visited its previous band of resistance between $26.00 and $27.80 where initial selling pressure is likely to arise. The daily momentum indicators have approached overbought territory suggesting that the current rally is likely to encounter resistance soon and is vulnerable to a pull back in the short-term.

While we continue to like the stock over the long-term, we are of the view that further consolidation is likely in the coming months, therefore active traders may use the current share price strength as an opportunity to lighten positions.

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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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