CSL Limited has rarely disappointed retail shareholders with a simple buy and hold strategy, even when other stocks were being savaged as in the Global Financial Crisis (GFC).
Yet the share-price trajectory of CSL is not always upwards. Inevitably there are periods of sideways consolidation interspersed with upward impulsive movements, resulting in a rerating of the price at a higher level.
The Metastock chart above displays this step-wise appreciation pattern with transition through three zones defined by support/resistance levels.
The most recent market re-rating of the stock followed a bullish half-yearly profit result presented on 14 February 2018. Buyers pushed the share-price from support at about $140 to a high of $167, with the formation of a double top, that often proves to be a reversal pattern.
Retracement did in fact follow but found strong support at $155 before rebounding higher, and looks likely to test resistance at about $168.
Technical interest in CSL now centres on whether the share-price, after its last close at $165.50, will continue to soar to new highs. Alternatively there may be a pause in trending with the share-price consolidating in Zone C as market participants re-evaluate its future prospects.
Readers of this post are urged not to rely on technical analysis alone, but to also be guided by their share-broker or financial advisor.
Addendum 27 April; 2018
The day after publishing this post was extremely bullish for CSL. The share-price gapped $1.81 higher at the open to $167.46, from the previous close, penetrated resistance at about $168, and continued to rise through most of the day, to close at $170.39 for a $5 gain.
Although the RSI has now re-entered over bought territory, the upwards momentum is so strong that the share-price is likely to continue to rise, and it is not impossible that it could approach an almost unimaginable $200 target in the near future.
Retail investors are warned not to go short on the market at this stage, expecting a trend reversal. Today’s hike in the price might already have those who are short, needing to buy back at higher prices, to exit their positions.