Aristocrat Leisure Shifts Gears, 2019 Uptrend Accelerates!

  • May 24, 2019 AEST
  • Team Kalkine
Aristocrat Leisure Shifts Gears, 2019 Uptrend Accelerates!

Aristocrat Leisure Limited (ASX: ALL) is an ASX listed gaming company headquartered in Sydney, Australia. The company is engaged in the designing and distributing gaming platforms and manufacturing of gaming machines. The company offers a wide range of casino management system, electronic gaming machines and slot machines.

Let’s see how the stock had performed on the charts.

On 24th December 2018, the stock had made its 52-week low of A$20.66 (as of 24 December 2018) after a continuous decline from A$33 odd levels registered at end of July 2018. The trend following system allows the trader to follow the trend until the formation of a trend reversal pattern or signal. The down trend from the July 2018 high to the 24th December 2018 witnessed one such trend reversal candlestick pattern at the 52-week low (as of 24 December 2018) which was the first sign of reversal.

Daily chart of Aristocrat Leisure (Source: Thomson Reuters)

The stock made a Morning star pattern, which is a bullish reversal pattern and has higher credibility when it is formed after a steep or longer downtrend. In the case of Aristocrat, the pattern had formed after a good downtrend, and the icing on the cake was the 52-week low (as of 24 December 2018), which adds additional weightage to the reversal pattern.

The morning star pattern consists of 3 consecutive candlesticks, which together forms the pattern. The first candle should be a bearish candle, which means the closing price of this candle should be lower than the opening price in the same time frame, which makes a red coloured candle. The second candle needs to be a star, which means the opening price of the second candle should be lower than the closing price of the first candle, which forms a partial gap down. If the second candle opens even lower than the low of the previous candle, it's even better, making a full gap down. The colour of this candle does not matter much, but the green colour is preferred with a small candle body. Further the third candle should open above the closing price of the second candle and opening above the high of the second candle is preferred. This candle must close in green which completes the morning star reversal pattern.

On 21st December 2018, the stock closed in red and opened a full gap down in the next trading session on 24th December 2018. On 27th December 2018, the stock opened a full gap up and completed the pattern.

Daily chart of Aristocrat Leisure (Source: Thomson Reuters)

After the completion, the stock has been in a consistent uptrend and had successfully attested the bullish reversal. In the later part of the uptrend the stock had faced a strong resistance around A$26.5, but on 16th May 2019, the stock delivered a successful breakout with the volume of 3.55 million shares which is quite high compared to the 20 days average volume of 1.6 million shares. The rally of this breakout is still holding on, and this breakout has accelerated the previous uptrend.

The company has a market capitalisation of A$18.13 billion, and the stock had touched a 52-week high and low of A$33.06 and A$20.66 respectively. The stock closed the day’s trade at A$29.17 up by 2.711%. It made an intraday high of A$29.20. The last one-year return of the stock is 2.1%, and the YTD return stands at 34.8%.


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