ASX Fintech Stocks- Afterpay and Zip Co Reverting to Mean Value

Summary

  • The global equity market is back in volatility with Nasdaq leading the pack, closer home ASX is also under heat taking cues from the global market.
  • Many stocks that were till recently buzzing are correcting after a steep rally.
  • Stocks such as Afterpay Touch Group Limited (ASX:APT), Zip Co Limited (ASX:Z1P) are now reverting to their mean value.

The equity market is gaining some volatility with S&P/ASX 200 index plunging in the past few days after a strong 40 per cent recovery since the onset of the second quarter of this year. On 10 September 2020, ASX 200 opened on a strong note, however as at AEST 2PM, the benchmark index gave up most of the gains and trading flat at 5,885.

Also Read: S&P/ASX 200 - A Rising Tide Bound For 8,000 Mark?

The decline in the major equity indices over global cues is now bringing a shift in the mood of the market participants with many stocks such as Afterpay Touch Group Limited (ASX:APT), Zip Co Limited (ASX:Z1P) under correction after a steep rally.

Afterpay Touch Group Limited (ASX:APT)

The shares of the Company have been under correction from the level of $95.97 (intraday high on 27 August 2020) to the recent low level of $73.68 (intraday low on 2 September 2020).

APT Daily Chart (Source: Refinitiv Eikon Thomson Reuters)

APT Daily Chart (Source: Refinitiv Eikon Thomson Reuters)

On following the daily chart, it could be seen that the stock is moving in an uptrend with prices trading above the 50-day and 200-day exponential moving average. The stock breached the +2 standard Deviation of the 20-day simple Bollinger band to attempt a volatility breakout.

  • However, the stock failed to sustain the breakout and corrected to slip below the support line of the short-term upward sloping trendline.
  • Furthermore, the stock reverted to the mean value of the Bollinger band, around which, APT is currently hovering.
  • At present, the stock is taking the support of 50-day exponential moving, which is overlapping around the region of -2 Standard Deviation of the Bollinger band.
  • The same area could act as immediate support for the stock in the near-term, followed by the 200-day exponential moving average.
  • The On Balance Volume (or OBV) is moving in tandem with the price action.
  • The 14-day Relative Strength Index (or RSI) is also moving in tandem with the price behaviour.

APT Daily Chart (Source: Refinitiv Eikon Thomson Reuters)

APT Daily Chart (Source: Refinitiv Eikon Thomson Reuters)

On applying the Ichimoku Kinko Hyo on the daily chart, it could be seen that the stock is moving in an uptrend with prices moving above Span A with a positive crossover between the conversion line and the base line.

  • Span A of the technical indicator is itself above Span B or the mean value of 52-week high and low, suggesting that prevailing sentiments are bullish in nature.
  • Also, the spread between Span A and Span B is increasing, which could further seed bullish sentiments ahead.
  • However, the 12,24,9, which is a leading indicator, is showing a negative signal.
  • On the support counter, the sky blue cloud area could act as immediate support, and a break and sustain below which could attract bearish sentiments.
  • Furthermore, on applying directional signals, it could be seen that plus DI has now slipped below minus DI, suggesting that at present, bearish sentiments are taking roots.
  • However, the spread between both plus DI and minus DI is still low, which should be monitored ahead to reckon if the emerging slight bearish or major bullish sentiment would prevail ahead.

Zip Co Limited (ASX:Z1P)

Z1P Daily Chart (Source: Refinitiv Eikon Thomson Reuters)

Z1P Daily Chart (Source: Refinitiv Eikon Thomson Reuters)

The stock is now reverting to the mean value of the 20-day simple Bollinger band after a failed attempt to sustain the volatility breakout. The immediate support for the stock is around the mean value, which is creating a support zone for the stock with the 50-day exponential moving average overlapping in the same region.

  • At present, the major trend is an uptrend with prices trading above both the 50-day and 200-day exponential moving average.
  • The major support for the stock is around the 200-day exponential moving average, break and price action below which could seed bearish sentiments ahead.
  • The OBV is moving in tandem with the price action with the signal peaking with the high in the stock price and correcting.
  • Likewise, the 14-day RSI is also moving in tandem with the price action.

Z1P Daily Chart (Source: Refinitiv Eikon Thomson Reuters)

Z1P Daily Chart (Source: Refinitiv Eikon Thomson Reuters)

On applying the Ichimoku Kinko Hyo, it could be seen that the stock is trading above Span A with a positive crossover between the conversion line and the base line with Span A itself trading above Span B, suggesting that current sentiments are bullish in nature.

  • Also, the spread between Span A and Span B is enlarging slowly suggesting that bulls are currently engaged.
  • Moreover, directional signals are also showing a positive signal with the plus DI trading above minus DI. However, the spread between both signals is now narrowing down.
  • Furthermore, the 12,14,9 MACD indicator is showing a negative signal.
  • On the support counter, the sky blue cloud could act as the support zone.

Disclaimer
The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.
   
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK