• Previous posts have followed the fortunes of the Commonwealth Bank. This is a follow-up post based on technical analysis, and should not be considered as constituting investment advice. Observations are based on a Daily Chart over the past year. It should be noted that chart patterns may be suggestive of future share-price movement, but it is only in retrospect that one can verify their significance.

V-shaped rebound.

• The year started by testing support at about $73.50 after encountering resistance at an all-time high of $80.
• From this low the share-price returned to an upwards trend, shaking off controversy over the ethics of its financial advice during the global financial crisis
• In May it transitioned into a sideways trading range pattern with most of the price action between $81 and $82.25.
• During this period the price spiked higher to a new all-time high of $83.92, before easing back.
• In doing this a chart appearance suggestive of a head and shoulder pattern was formed.
• This proved to be predictive of a corrective move lower which wiped off all the previous gain.
• Support was again found at around the $74 level before rebounding
• The impulsive move higher has been a strong one with overnight gapping to reach and test resistance again at $80.
• The trend line has been penetrated but not convincingly.
• Today’s price decline formed a bearish engulfing pattern suggesting reversion into a corrective phase.
• This would bring back concerns for lower prices instead of further gains, with a lower high than the previous one.

Categories: Chart Analyses