AU Stock Focus Woolworths medium term uptrend remains intact

Woolworths, a leading supermarket operator in Australia and New Zealand will report its annual FY 2017 results tomorrow, 28 August 2017. Its operating profit and net income are forecasted to be at AUD2.39 billon and AUD1.42billion respectively.

Let’s us now examine Woolworths from a technical analysis perspective.

Medium-term technical outlook on Woolworths (ASX: WOW)

Key technical elements

• Since its low of 20.34 seen on June 2016, Woolworth has started to undergo a medium-term uptrend as it staged a bullish breakout from its bearish descending channel from April 2014 high (see weekly chart).
• The key medium-term support rests at 25.30 which is defined by the lower boundary of the medium-term bullish ascending channel in place since June 2016 low (see daily chart).
• The daily RSI oscillator remains positive above its corresponding support level at 57% and still has potential room to manoeuvre to the upside before it reaches an extreme overbought level (depicted by the blue box). These observations suggest that medium-term upside momentum of price action remains intact (see daily chart).
• The key medium-term resistance stands 29.45/60 which is defined by the upper boundary of the aforementioned ascending channel, former long-term range resistance from November 2011 to October 2010 and a Fibonacci cluster (50% Fibonacci retracement of the major down trend from April 2014 high to June 2016 low & 0.618 Fibonacci projection of the medium-term up move from 06 July 2016 low to 02 May 2017 high projected from 21 June 2017 low) (see daily chart).

Key levels (1 to 3 months)

Intermediate support: 26.29

Pivot (key support): 25.30

Resistances: 28.02 & 29.45/60

Next supports: 23.45 & 22.30

Conclusion

The medium-term uptrend of Woolworth (WOW) remains intact and as long as the 25.30 key medium-term pivotal support holds, WOW is likely to see another round of potential bullish impulsive upleg target the next resistances at 28.02 follow by 29.45/60 next.

However a break (daily close) below 25.30, the bears should take over to trigger a potential corrective decline towards the next support at 23.45 and even 22.30 next.

Charts are from eSignal

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