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Day two: our potential CBA trade

I’ve used an hourly chart of CBA rather than the daily to highlight the possibility of a slight sell-off. 

The stock is holding the 38.2% retracement of the January to February sell-off at $74.69, while strong horizontal resistance at $75.00 is going to be hard to crack.

The stochastic indicators are topping on the hourly chart and are certainly at extended levels, as is the 10-period RSI. If you look purely at the stochastics, the possibility of a pullback from this retracement is high. Whether that results in sustained selling, or traders buying the dip is yet to be seen.

ANZ’s results are out today and strong numbers here could be used to take a view on CBA’s earnings tomorrow, with traders keen to see any trends in net interest margins or bad debt improvements.

All in all the hourly chart is enough to keep me cautious from taking new longs today and will be looking for a pullback to initiate longs, although they could be fairly shallow.

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