Chart updates – Origin Energy and AGL Limited.

By Kenneth Robson on March 4, 2016 • ( 0 )

A recent (two and a half weeks ago) post compared the charts of two leading Australian Energy stocks: Origin Energy and AGL Limited. The share price of one (Origin Energy) had been savaged as a result of the collapse in the price of crude oil. The share-price of the other (AGL Limited) had not only been unaffected, it had risen to an all-time high.

https://technicality.me/2016/02/14/chart-reviews-agl-org/

Both stocks may prove to be excellent choices for retail investors, but represent opposing investment strategies. The former a potential recovery stock. The later a momentum riding stock. The earlier post established a baseline for comparing the performance of these two stocks.

Results to date

Origin Energy

Origin Dy Mar4,16

In this time the share price of Origin Energy appreciated from about $3.50 to $4.98, a gain of 42.3%, after forming a double bottom, and initiating an upwards trend. The rebound has now touched the 38.2% Fibonacci retracement level, and the RSI is touching the overbought level at 70, suggesting that there could be a pause for the present in further upwards trending.

AGL Limited

agl dy mar4 2016

In this time, the share price of AGL has been static, being $18.38 at close on the 15/2/16, and $18.22 at the time of writing. A second lower peak has formed following the all time high of $19.65, and the last two candlesticks form a bearish engulfing pattern, suggesting that the share price might soon test support at $18. $18 is also the most recent 60 day moving average value for AGL. This could be considered an approximate recent (past three months) estimate of what the market considers is a fair price for AGL.

Discussion.

A single chart is like a snapshot. A trading story can only evolve with time, and to read it one must have a sequence of charting pictures. Momentum plays such as AGL will outperform only as long as their momentum lasts. There is often transition from an uptrend into a trading range, a breathing space that can be used to look for alternative up-trending options.

Recovery stocks, such as 42.3% for Origin Energy within the last 3 weeks, can be extremely rewarding, but are much less predictable.