Technicals | Aug 09 2012
By Robert Clayton
Commonwealth Bank ((CBA)) last at $57.01
Technical analysis is a method of predicting price movements and future market patterns/trends by studying charts of past market action. In this CBA example, the “Double Top” is a bearish reversal pattern and is identified by two peaks of similar height, followed by a break below the level of the recent recorded support line. In this example, the daily graph has held to a relatively strong uptrend that originated from $49.00 (i), back on 1st June’2012. Recording its first peak at $58.00 (ii), on 31 July’ 2012, the price fell and respectively held at $56.00 (iii).
Staging another strong advance, the price re-challenged $58.00 (iv), and after the third candle day a rejection has now been confirmed. In essence, if this is a true “double top” pattern then the immediate target holds towards $56.00. This level is the key to this formation. The measured breakout holds vertically from the highest peak to the support line. From the break you then measure the projection which gives you an objective of $54.00 (v).
Rob Clayton – Senior Technical Analyst – has been providing technical analysis on Foreign Exchange, Futures, and Interest Rate products for the past 21 years. He held many senior analyst roles including the role of Senior Technical Analyst at Westpac Institutional Bank for 12 of those years. Rob is now part of the investments team at GTL Capital Management. Rob’s daily reports are read by institutional and professional clients in Australia, Asia, Europe and the Middle East.
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