Technicals | May 01 2013
Bottom Line 30/04/13
Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Technical Discussion
Results announced today by ANZ Bank ((ANZ)) certainly put a firecracker under the share price which was already doing everything asked of it. All-time highs have now just about been attained meaning a crucial point, as well as our target area has been met. Of course Commonwealth bank ((CBA)) achieved all-time high status late last year and hasn’t looked back. Can the same happen here with ANZ? It definitely can, especially if the broader market continues to show the strength seen of late. Remember, the Banking sector remains the flavour of the month as Resource based stocks continue to languish. And right here and now there is no indication that this characteristic is going to reverse any time soon.
It will at some point in time but we need to see early warning signs before jumping ship; otherwise we continue to go with the flow and expect banks to continue onwards and upwards. That said, we have to be cognizant to the fact that the target zone has now been achieved with the next focus of attention on the wave equality projection sitting slightly above current levels. Rejection at that point would open the door for a corrective phase to unfold though sellers entering the fray right here and now isn’t looking likely.
The one thing that is very apparent here is that a larger corrective movement higher has been unfolding which is characterised by overlapping wave structures that commenced back at the August 2011 low. That said, the company has gained almost 80.0% in value from those lows which just goes to show that corrective patterns still have excellent upside potential, especially within much larger degree patterns. It’s also worth noting that the wave equality projection made from those major lows sits at $32.03 making it extremely significant. If the wave equality projection is exceeded we’d expect price to continue up to the next Fibonacci ratio which in this instance is the 1.618 projection. That provides a target above $40.00 which means there is plenty of blue sky ahead if this zone can be cleared. The only slight reason for caution is the fact that Type-A bearish divergence is apparent on the weekly chart (not shown). However, it has yet to trigger so should momentum continue our oscillator will unwind back into the overbought position which in effect nullifies the divergence. So all in all, it’s a very interesting chart at a critical juncture.
Trading Strategy
Our trailing stop came very close to being tagged though importantly we remain in our long position from $26.21 and continue to go with the flow. I don’t want to be too aggressive with the trailing stop here so we’ll place it just beneath the prior pivot low at $28.40. If that level is overcome it increases the chances that an interim top is in position as overlapping wave structures would be making their presence felt. If you’re not already involved there is no low risk entry right here and now and until one presents itself there is no reason to jump on just for the sake of it, especially as our target area has now been met. Should the wave equality projection be overcome then we’ll be keen to look to jump on following a low volume consolidation pattern.
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