Market analyst Regina Meani discusses CSL (ASX:CSL).
We last looked at CSL Limited (ASX:CSL $297.93) back in March this year when the share price was $253.90. March turned out to be a big month for CSL as on 24 March it released 830,000 locally made doses of the AstraZeneca COVID-19 vaccine, ahead of initial scheduling. Looking at the price movements, before the roll-out, the downwards gap between $259.40 and $262.50 was filled within two weeks, lending confidence to the $242 low on 9 March as a significant turning point.
Since then, the price has successfully overcome barrier zones identified around $270 and in the $285-290 area to forge ahead into the objective zone between $300 and $310. The objective was achieved when the price reached $307.50 on 18 June and hit into the downtrend line drawn form the February 2020 peak. Combined with overspent momentum the price was rebuffed. Charts are generally kind to us and if we don’t take up the first signal then generally, we are given others although for the trader it is always a good idea to take part or full profits once an objective is reached. Another exit signal was given on the drop below $2.98 and then confirmed on 24 June with the drop below $2.92, breaking the short-term uptrend from the March low point. Overall, we were given three sell points.
The next few weeks from late June into early July saw the price oscillate lower to find a triple bouncing point at $273, $274.5 and $275.20 on 9, 14 and 15 July. The rebound has seen the price stall at another resistance line drawn through $295 on 26 July producing a churning phase within a tight range with support at $286.80. The churning has sought to rebuild momentum to tackle the higher barriers in the $300-310 area and last Friday we saw the price breakaway with a push up to close at $297.93.
Looking at the longer-term weekly and monthly charts we note the similarities in momentum and pattern to the triangular consolidation which took place from mid-2008 to early 2012. While this action needed just under four years, we find that the momentum build up has been swifter in the current phase and may herald an earlier return to the upward path. A break away through the $300-310 resistance would be the first signal that the next stage in the upward path was underway.
Until the next stage higher is established the price remains under the downward influence and more oscillations may develop as the phase progresses. Support lies at $285-295 and more importantly around $265 as a drop below this level could seriously impact the resumption of the upward path.
On a breakaway through $310 the stock would encounter some resistance around $320 but with the peak at $342 providing the final resistance to the stock swinging higher towards $425 and potentially much higher.