SYD looks really bullish on all time frames right now, although it looks a little overbought on the hourly chart. On the daily and weekly chart we can see a clear break-out of the March high and it’s fairly clear that the market likes this stock right now.
On the daily chart the stock is not overbought just yet, but I am keen to respect the hourly chart and look for a slight dip as a better entry point. The daily and weekly close above the March high tells me a lot about traders’ psychology around this name right now and the buyers certainly have the upper hand.
Stops could be placed below the April low of $4.09 and if you look at the hourly chart you can see really strong support here.
On the weekly chart it’s interesting to see stochastic oscillators testing, but ultimately holding above the 80 level. I will be watching this level intently this week and while the stock can have long periods of being above the 80 level, when the oscillator falls below this line we tend to see reasonable sell-offs.
From a pure momentum point of view, the fact that SYD closed above the top Bollinger band is positive, especially as the RSI is not in overbought territory yet, which many traders who follow mean reversion strategies would be looking at. This highlights that price is strong, but not significantly stretched just yet. Still, I feel buying the dip could be prudent, although many pure momentum traders will look to buy on open.
Fundamentally the risk is we start seeing recommendation downgrades from the brokers on any moves above A$4.50. Looking at the sixteen analysts who cover the stock (I’ve looked at Bloomberg), six have buys, eight have holds and two have sells. The consensus price target is A$4.28, so there is a risk of downgrades on any further moves. Still, the technicals look bullish and I feel the stock could head above A$4.50 in the short to medium term.