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ASX200 outlook: top 3 stocks to watch this week

We analyse some of the most important things traders and investors should watch out for in the week ahead.

Iron ore Source: Bloomberg

Risk-off sentiment keeps ASX200 flat for the week

Australian equities continue to struggle, in a broader global market backdrop marred by higher implied volatility and a general bearishness. A slowing global economy, coupled fears about Fed tapering and (more recently) Chinese property developer Evergrande’s collapse is driving the dynamic, and weighing heaving on the ASX200.

The index closed practically flat last week but has kicked off the new week with a steep drop.

Top 3 ASX stocks to watch

Here are 3 stocks that have caught our eye and may be worth watching in the week ahead.

BHP Group Limited (ASX) (BHP)

Flight Centre Travel Group Ltd (FLT)

Paladin Energy Ltd (PDN)

BHP Billiton (BHP)

Given the general concerns about global growth, and Chinese economic activity and financial conditions, the ASX’s big miners remain on the back foot. Iron Ore prices extended their plunge last week, hitting the vexatious milestone of dropping more than US $100 from its recent highs. The drop in iron ore prices saw BHP Group Limited (ASX) shares extend its losses during the week’s trade, with the stock’s post-pandemic uptrend breaking down and momentum turning to the downside. Technical support at around $39-40 has broken now, with the next key levels to watch the 200-week MA at roughly $37 and support at $33-$34.

BHP Source: IG charts

Flight Centre Travel Group (FLT)

Flight Centre Travel Group Ltd shares climbed last week, as the stock price extends its post-pandemic grind higher. Sentiment towards the stock has improved in recent weeks, as Australia’s accelerating vaccine drive and plans of reduced social restrictions in New South Wales and Victoria bring closer the prospect of domestic air travel.

FLT shares remain in a tight trend channel, with price momentum currently skewed to the upside according to the weekly RSI. Although the short-term outlook for the stock remains closed in uncertainty, the longer-term risk/reward remains favourable, with a break above the upper bound of the trend channel, currently at roughly $22, a possibly bullish sign of greater upside.

FLT chart Source: IG charts

Paladin Energy (PDN)

As we outlined here last week, uranium shares have been on a tear recently. Paladin Energy Ltd has been one noteworthy outperformer, doubling in value over the course of the last month. The bull case for uranium stocks has built in recent months, as investors increasingly bet on a nuclear future because of the growing impacts of climate change and the proven unreliability of renewable energy. Paladin’s share price is clearly breaking out right now, with the weekly RSI showing strong upward momentum and an oversold reading. Risk-reward may currently be skewed to the downside for Paladin shares. However, the primary trend clearly remains bullish.

Paladin Source: IG charts

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