Ansell Limited (ASX: ANN) is an ASX listed healthcare company based in Australia, having more than 12,000 employees with global operations in regions like North America, Asia Pacific etc. The company is constantly developing products and technologies which are marketed under well-known brands.
Let’s have a look at the technical picture of the stock and review its Year to Date Performance.
Weekly chart of Ansell Limited (Source: Thomson Reuters)
The stock started 2019 with the opening price of A$22 and made its 52-week low of A$21.07 (as on 1 January 2019) just after two days. On the weekly chart A$20.5 – A$21 is a very strong support zone from which the stock price has bounced couple of times in the past. As per technical analysis, more the number of times the support or resistance is being tested (touched), higher the reliability of the support zone. In the case of Ansell, this support zone had been tested four times since October 2016, and every time the stock had reversed from this zone.
In January 2019, the same story repeated, and despite touching the 52-week low, the stock got support from these levels and again reversed on the upside. The stock started to rally and touched the high of A$27.5, registering a decent return of more than 30% from the 52-week low.
During any trend, one aspect that needs to be analysed to determine the quality and sustainability of the trend is its accompanying volume. Any trend with higher volume is generally sustainable, and on the other hand, a trend with low volume is generally not sustainable.
During this rally, initially, the volumes also started to catch the rising trend as depicted by the On Balance Volume (OBV) indicator. OBV is a technical indicator that plots volume trend on the chart after taking price action into consideration. In other words, the value of OBV drops when the price closes in negative for that particular time period and the value increases if the price closes in positive.
As seen throughout the rally, the OBV started from 40.9 million (at the end of 2018) and had risen all the way to 66.25 million (at its peak), depicting positive volume trend during the rally.
In the last week of April 2019, the stock made its high of A$27.5 with OBV making its high of 66.25 million at the same time, after which both started to fall. After the peak, the price slid to the low of A$25.03, and the OBV slid to a low of 59.92 million. The fall in both the price and OBV, after a decent rally is indicating a price correction and if the volume increases during the correction, we may witness further fall. If it trades above the previous swing high of A$27.5, the stock may move towards the next resistance level of A$29.5 – A$30.
Daily chart of Ansell Limited (Source: Thomson Reuters)
Furthermore, zooming into the YTD daily chart, we notice that the stock has breached its trendline support and is currently trying to test its trendline. The trendline has now become a resistance, as whenever the support gets breached it becomes resistance for the future and resistance becomes support upon breach. Due to this resistance, selling could come around the trendline.
The company has a market capitalisation of A$3.43 billion, and the stock had touched a 52-week high and low of A$29.64 and A$21.07 respectively. The stock closed the day’s trade at A$26.730, up by 3.484% as compared to its previous close price.
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