Technical Analysis of Appen shares

Stock Watch

Good morning. I'm Michael Gable from Fairmont Equities, and this is Stock Watch for the Finance News Network, on Monday 23rd September. If you have a request, send it through. Any advice is general only, so please consult your finance professional before acting on any advice given here today.

So, this is a daily chart for Appen (ASX:APX). Obviously, it's a popular stock, a lot of people are looking to buy it at the right levels. I did look at this chart a few weeks ago in our client research. I do think there are lower levels, so I'll just explain what we're seeing here.

Obviously, Appen had a very nice rally up until sort of end of July, beginning of August, but started to break down with the rest of the market. What we've got here is, this red candle pretty much dominates the last several weeks. So we've had basically a... We've tried to get a recovery in the Appen share price, opened higher on the day of the results, and was sold down quite sharply. As we can see, after that it tried to rally, but it couldn't breach the mid-point of that dominant red candle. So, that was a bit of a warning sign, and as we could see, it started to fall away.

Most recently, we've had bit of a move higher, but nothing too bullish. So, what I'm looking at is this gap here. So, in February this year we had a gap created, sort of closer to that $19 level. At the moment, I think Appen still has further downside and I'd be looking to see some sort of support get established around that level. So at the moment, I think it's too early to be buying Appen.

Just moving on to some viewer requests. Australian Pharmaceutical Industries (ASX:API), too early to be buying this one, but what I've noticed is price action on this weekly chart is starting to tighten up, so that means that we just need to continue watching it. It's probably very close to moving out in one direction or the other, too early to say. Keep an eye on it. If we see a nice break to the upside of this triangle, then obviously that's a rally you could follow, but if it breaks underneath, then we're set for lower levels. For the moment, it's just one to be watched.

Electric Optic Systems (ASX:EOS). So, this is a daily chart behind me. It's had a fantastic run since sort of April-May, when it broke out of a longer-term sideways consolidation. Most recently, we've got clear price rejection from above $7, so even though longer-term it still looks okay for now, short term, it indicates we're going to get some sort of weakness, whether it's back to this gap here at $6.50, potentially this support level at $6, it's too early to say. But the odds are that we see this one decline for a while, and then we just need to wait for some sort of reversal to let us know that it's ready to head higher again.

ASX (ASX:ASX). So this is the company, ASX. This daily chart to me indicates we'll probably see lower levels. So, we've had the peak here at almost $90, fell away at the beginning of August, like the rest of the market, and then what I've noticed is we've had this symmetrical triangle. A symmetrical triangle has formed, the shares broke down a couple of weeks ago, they've tried to rally, but we could see here price rejection as it tried to retest the underneath of this triangle. So, unless it can somehow get back up towards 85, it looks like it's going to roll over and head to lower levels.

Finally, Insurance Group Australia (ASX:IAG). This is a daily chart, so this one also, I think, has lower levels ahead of it. What we've got here is, this line indicates the old high from 2018, so the shares managed to pop through that, but they were only able to hold it for a few days before getting sold off extremely sharply at the beginning of August. It's tried to rally, but it started to break down. So, what we now see is a bearish flag. So, we've got a downwards move, very impulsive, then we've got a very corrective move higher, but now it's breaking down again. You can see, in these last few days, there's clearly price rejection anywhere near $8, so I think IAG is set for lower levels.

That's it for this week. If you have a request, send it through and I'll try to cover it next Monday for you.


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