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Bottom Line 09\/09\/15<\/strong><\/p>\n Daily Trend: Up<\/span> Technical Discussion<\/strong><\/p>\n Commonwealth Bank ((CBA)) is Australia’s leading provider of integrated financial services including retail banking, premium banking, business banking, institutional banking, funds management, superannuation, insurance, investment and sharebroking products and services. The Group is one of the largest listed companies on the Australian Securities Exchange. It provides a full range of retail banking services including home loans, credit cards, personal loans, transaction accounts, and demand and term deposits through its Commonwealth Bank and Bankwest brands. The Group has leading domestic market shares in home loans, personal loans, retail deposits and discount stockbroking, and is one of Australia’s largest credit card issuers. For the year ending the 30th of June 2015 interest income increased 1% to A$34.1B. Net interest income after loan loss provision increased 4% to A$14.81B. Net income applicable to shareholders increased 5% to A$9.01B.\u00a0 Broker\/Analyst consensus is a comprehensive “Sell”.\u00a0 The dividend yield is currently 5.8%.<\/p>\n Reasons to be cautious longer term: It’s just over a couple of weeks since our last look at CBA although back then we concentrated on the weekly time frame and therefore the larger degree patterns. These portended a decent bounce, albeit within a large consolidation pattern \u2013 likely a triangle.\u00a0 The ideal situation was to see short-term weakness taking price into the area of confluence around $71.00 before reversing higher.\u00a0 In that respect we couldn’t have asked for too much more with slightly lower levels being tagged over the past couple of weeks.\u00a0 Over the past few days a solid rally has been unfolding and although it’s far too early to be getting overly confident in regard to a multi-month trend unfolding this would be the perfect world scenario from a pure pattern perspective.\u00a0<\/p>\n We also noted Type-A bullish divergence last time although at that juncture it hadn’t triggered.\u00a0 It has now which opens the door for the recent show of resilience to continue for the foreseeable future.\u00a0 Incidentally, there is also bullish divergence evident on the weekly time frame (not shown) which should support price.\u00a0 Bullish divergence doesn’t necessarily portend a strong impulsive movement higher but it does suggest that the prior pivot low will not be overcome until our oscillator rotates all way back into the overbought position which on the weekly chart isn’t going to happen overnight.\u00a0 In summary, there is plenty of confluence and positive patterns showing here.\u00a0 All that’s left is for price to prove itself over the coming weeks.<\/p>\n Trading Strategy<\/strong><\/p>\n One of the reasons for advocating caution in the amount of trades taken is because greater volatility increases the chances that our initial stop will be tagged during normal market noise which unfortunately is exactly what’s transpired here.\u00a0 We recently initiated positions with the initial stop set beneath the strong reversal bar on the 25th of August.\u00a0 As can be seen that low was penetrated by the slimmest of margins last week before buyers stepped in.\u00a0 The end result is a little bit of frustration and a small loss although at that time it was a valid set up with a nice risk\/reward.\u00a0 I don’t see any reason to chase price higher from here although a micro consolidation pattern or even a small a-b-c retracement over the coming days would gain our interest and provide another low risk entry. Re-published with permission of the publisher. www.thechartist.com.au All copyright remains with the publisher. The above views expressed are not by association FNArena’s (see our disclaimer).<\/em><\/p>\n Risk Disclosure Statement <\/strong><\/em><\/p>\n THE RISK OF LOSS IN TRADING SECURITIES AND LEVERAGED INSTRUMENTS I.E. DERIVATIVES, SUCH AS FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER YOUR OBJECTIVES, FINANCIAL SITUATION, NEEDS AND ANY OTHER RELEVANT PERSONAL CIRCUMSTANCES TO DETERMINE WHETHER SUCH TRADING IS SUITABLE FOR YOU. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL OF THE RISKS AND OTHER SIGNIFICANT ASPECTS OF SECURITIES AND DERIVATIVES MARKETS. THEREFORE, YOU SHOULD CONSULT YOUR FINANCIAL ADVISOR OR ACCOUNTANT TO DETERMINE WHETHER TRADING IN SECURITES AND DERIVATIVES PRODUCTS IS APPROPRIATE FOR YOU IN LIGHT OF YOUR FINANCIAL CIRCUMSTANCES.<\/em><\/p>\n Technical limitations If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.<\/strong><\/em><\/p>\n
\nWeekly Trend: Down<\/span>
\nMonthly Trend: Down<\/span>
\nSupport levels: $70.99 – $69.12
\nResistance levels: $88.40 \/ $96.17<\/p>\n
\n? Further capital raising is feasible.
\n? Leveraged to a low interest environment.
\n? The March quarter came in below consensus.
\n? Margin pressure on mortgages has been increasing.<\/p>\n
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