Warning Signs For CBA

This story features COMMONWEALTH BANK OF AUSTRALIA. For more info SHARE ANALYSIS: CBA

The weekly chart for Commonwealth Bank ((CBA)) is showing clear and present danger of forming a topping pattern, the TechWizard suggests.

DOUBLE TOP AT $75.00 AND DIVERGENCE IN THE MACD AND ADXDMI WITH PRICE ACTION:

 

This shows the last leg-up suffers from internal weakness, the Wiz suggests. Though it may not happen tomorrow or next week, there are clear signs of weakness in the two main indictors that the Wiz uses on a regular basis: the MACD & ADX DMI.

SINCE RALLYING OFF A BASE AT $50.00 CBA HAS RAN TO $75.00 IN THE LAST 12 MONTHS.

But the last rally from the July low pullback of $65.00 has not shown the same strength as the previous rally and this has shown up in the MACD and ADX DMI not making new highs.

Now this is a weekly chart, not daily, so things happen a lot slower. The Wiz can't put a timeframe on things, but if he was long CBA he would be tightening up his stops and preparing to take profits, he says. But it will only BE a pullback, not the end of the end of the world. Probably back to test $65.00 and base there before another attempt to breach the $75.00 key resistance  level.
 

The TechWizard is the pseudonym of Scott Morrison, whose experience in financial markets exceeds twenty years. Morrison operates his own website nowadays at www.techwizard.com.au. All views expressed are the TechWizard's, not FNArena's (see our disclaimer).

Technical limitations

If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.

Click to view our Glossary of Financial Terms