12 month daily candlestick chart of the Commonwealth Bank

This chart of the recent price action of the Commonwealth Bank of Australia has been  posted to illustrate how Technical Analysis can be a reliable tool on which investors can rely to give them an edge in managing their portfolios.

I accumulated CBA stock when it was trading in a range between $70 and $79 per share. At the end of last year the share-price broke resistance at $79 to trade well above $80, but the momentum of the trend stalled and the share-price started to decline with the shares going ex-dividend.

At the end of March 2017, the chart looked to have formed a definite head and shoulder pattern. I therefore completed my exit from CBA to realize profit. To my surprise however, buyers in April pushed the share-price up to a high of $87.74.

I was thinking that my exit was a mistake, but am now grateful for having heeded the technical signals when I did. With the imposition of a levy on the major banks in the May budget, the share-price has fallen below my selling prices, and it appears likely that with the prospect of higher costs to customers and pegged dividends for shareholders, the share-price will fall back into its former trading range.

Once again I wish to re-iterate that readers should not rely on technical analysis alone, and to emphasize that I am not qualified to give investment advice. These posts share my experiences as a retail investor using TA as a tool to manage my own investment portfolio.

Categories: Chart Analyses

Tags: Commonwealth Bank of Australia, Head and Shoulder pattern