Ansell’s Upward Trend

This story features ANSELL LIMITED. For more info SHARE ANALYSIS: ANN

Bottom Line 05/03/14

Daily Trend: Down
Weekly Trend: Down
Monthly Trend: Up

Technical Discussion

This is our first review of Ansell ((ANN)) so we’ll start with the weekly chart to get a feel for the larger degree patterns.  The first thing to notice is the exceptionally strong trend higher that kicked into gear in early 2009.  The longer term trend actually commenced even earlier, back in 2001 though even over the past five years the company has gained over 196.0% in value which is a stellar effort whichever way you want to look at it.  And if we are correct here there is no reason to suggest that the recent retracement is the early stages of a more significant decline.  Indeed, the pull-back has been symmetrical in nature both in terms of price and time which portends to the prior trend resuming sooner rather than later – at least that would be the ideal situation.  We have some bullish patterns to take a look at though we’ll discuss those in more detail below.  Suffice to say the trend is up and there is absolutely no point in trying to fight it.

First of all let’s take a look at the larger degree wave count which shows that the 2007 high completed wave-(1) in a textbook 5-wave movement.  The subsequent retracement completed as an expanded flat which is a pattern that has been cropping up on these pages quite often over recent times.  The general guideline with these types of structures is that wave-B probes above the recent pivot high by a small margin with wave-C terminating just beneath the low of wave-A which again is a box that can be ticked.  The typical retracement zone was also tagged very nicely indeed.  From wave-(2) the trend gets even more impulsive in nature with shallow corrections being the norm again adding weight to the bullish case.  It’s often a self-fulfilling prophecy in many ways as traders and investors wait on the sidelines to jump on during brief retracements which often doesn’t allow for the typical counter trend move to reach its destination.  That’s definitely been the theme over the past few years – at least until the past few months.  In fact if we fast forward to minor degree wave-iii we can see that the subsequent retracement has been deeper although very importantly it hasn’t entered the price territory of wave-i which would invalidate the pattern.  However, it has tagged the wave equality projection almost to the cent at the recent pivot low which shows good confluence with the 50.0% retracement level which is as deep as we want to go at this stage of the trend.  So from an Elliott stance it’s about as textbook as it gets so let’s see if the bulls can come out of the woodwork and kick start another substantial leg north.  Technically we are in a position to do just that.

Trading Strategy

Although we are looking at the weekly chart here it would be logical to move down a time frame when looking for a low risk entry – especially having completed a symmetrical 3-wave retracement down.  You could use our SaR indicator as a trigger mechanism which currently sits at $18.78.  The initial target sits at $23.77 although longer term that area should be exceeded by a substantial margin. Wait for price to close above the indicator before initiating positions.  The initial stop should be set at $17.49.  I’m going to put forward a formal recommendation for those interested in getting involved with a strong trending stock such as this.  As I have mentioned before there is nothing wrong with looking at recovery plays but it’s always a good idea to balance your portfolio with companies embarking on strong trends which is definitely the case here.
 

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