Photo: Glenn Hunt
Bank of Queensland is a significant second-tier bank which, unlike some of its big four cousins, is trading well below its pre-financial crisis highs. This week’s chart, produced by Mark Umansky, a councillor with the Australian Technical Analysts Association and a certified financial technician, plots the progress of BoQ over seven years using monthly intervals.
We see that after an all-time high closing price of $18.10 in October 2007 BoQ, along with the rest of the market, fell almost 64 per cent. It reached a low of $6.55 in February 2009, a price last seen six years earlier. This level then became a support for almost six years and has not been tested for some time.
Institutional investors saw the share price almost double between February 2009 and April 2010, and there were two attempts to breach $12.07, which has emerged as a major resistance level. Since then, BoQ has basically traded in a congestion band bordered by $6.55 and $12.07.
Recently BoQ broke out of the congestion pattern to the upside at point 3 on the price chart. However the breakout was shortlived, with the stock falling back into the congestion band causing what looks at the moment like a failed breakout.
The recent rise on the chart is supported by a series of higher peaks and troughs as the price progressed through points 1, 2 and 3. However, there has been a negative indicator since November 2013 with stochastic oscillator turning down, creating divergence with the share price. A similar divergence occurred in 2009 and 2010, presaging heavy falls in the share price.
The stochastic oscillator expresses the closing price in relation to the high-low range over a set number of periods. It measures the speed or momentum of changes in price.
So BoQ is sitting in a delicate position. Traders wanting to profit from a breakout to the upside could buy in once the stock goes through point 3 on the price chart with a stop loss set at the bottom of the trough formed by the new share price spike.
If the price continues to fall, those with open positions could close them and wait till a new trend emerges. Short sellers could also enter the market with protected positions in case of a turnaround.
Surmising likely scenarios in advance gives investors strategies that can be deployed immediately, preventing loss of opportunity through analysis time lags.
BoQ recently raised $400 million at $10.75 a share to finance its purchase of a loan book and other assets from Investec Australia. However, the daily price was trading well above that, at around $12, at the time of writing.
This column is not investment advice. [email protected]南京夜网, ataa南京夜网.au
This story Administrator ready to work first appeared on Nanjing Night Net.