ASX:TCL and ASX:BLD – A Look Through Technical Microscope

  • Mar 24, 2019 AEDT
  • Team Kalkine
ASX:TCL and ASX:BLD – A Look Through Technical Microscope

Here we discuss the technical story building behind two industrial sector stocks - Transurban Group and Boral Limited.

Transurban Group (ASX: TCL)

Transurban Group is a company working in the industrial sector and it is one of the biggest toll road network operators in Australia. From performance standpoint, its 1H FY2019 result has been likable with growth in Average Daily Traffic (ADT) and other key metrics. Now lets have a look at the technical scenario. On 12th October 2018, TCL stock made its 52 week low at A$10.7 after falling continuously from A$12.3 odd levels. But interestingly at this very bottom, there was a formation of a piercing candlestick pattern on the price chart. A piercing candlestick pattern is a very specific formation of two consecutive candlesticks wherein the first candlestick is red/black (closing is lower than the opening) and the next candle is green/white (closing is higher than the opening). Additionally, the green candle should open below the closing price of red candle and must close at least halfway through the real body of the red candle (real body is the area between opening and closing price). This is generally a bullish reversal pattern and therefore has a higher significance if forms at the bottom levels. As seen on the price chart, the pattern has formed at the 52 week low, which is one of the best possible locations on a price chart for any bullish reversal pattern. Soon after that the prices never turned back, and in a smooth and calm uptrend, touched a high of A$12.96 (as of 22nd March 2019) and closed at $ 12.86. Now stock is trading around its resistance level, and we have seen in the past that the prices may turn around from these levels. But as of now (22nd March 2019), the trend looks positive.

TCL Daily Chart (Source: Thomson Reuters)

Boral Limited (ASX: BLD)

Boral Limited is in the business of building and construction materials, and its half year result for 1H 2019 was driven by a mix of conditions. At the beginning of October 2018, the stock price was trading around A$6.9 – A$7. From there we have seen a sharp and continuous decline In the stock. In fact, the decline was so consistent that the Relative Strength Index (RSI) has shown oversold readings (below 30) for almost 11 weeks on a weekly chart (which rarely happens). After 11 weeks, the momentum slightly reversed on the upside, and in the first week on January 2019 the stock came out of the oversold zone. But the momentum faded soon, and the stock again plunged to even lower levels, making new 52-weeks low. Since the stock came out of oversold zone its been trading in a range of A$5.29 – A$4.49. As long as the stock is trading in this range, there a directional play becomes difficult to be witnessed. However, the trend indicates some weakness and a breach below the 52 week low of A$4.49 could initiate more selling. If the stock breaks above the resistance of A$5.29 and sustains there for some time, then it could go to the nearest resistance of A$5.65 and further over this level. Another thing to be noticed is that the longer a stock takes to break either side of this consolidation range; the stronger could be the resulting move. While BLD is still looked out to be a fundamentally decent stock, many aspects like the above are important to be watched out for in the near term.

BLD Daily Chart (Source: Thomson Reuters)


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