ASX200 outlook: top 3 stocks to watch this week

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

ASX200 jumps on dovish RBA, but fails to hold momentum

The Australia 200 has pushed higher in the last week, regaining lost ground after the RBA proved “less-hawkish” than expected at last night week’s policy meeting. The prospect of a central bank remaining behind the curve on inflation lowered nominal yields and boosted risk-assets, with yield sensitive sectors amongst the markets outperformers. Materials stocks have also outperformed, despite continued weakness in iron ore prices, as commodity prices find buying support from investors seeking safety from inflation in real assets.

Top 3 ASX stocks to watch

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

Westpac (WBC)

Westpac Banking Corp stocks plunged last week, after the company delivered a disappointing set of full year results to the market, which included smaller than expected profits, a smaller than estimated share buyback scheme, higher expenses than forecast, and a narrower net interest margin. Having failed to break through its downward sloping trend line resistance around $26 per share, the stock gapped following its results, to pierce support at $25 and $23. The trend looks to the downside now for Westpac shares, with trendline support at $22 the next key level to watch. If that is breached, it may open a drop for the stock to $20.

Northern Star Resources (NST)

Northern Star Resources Ltd shares have broken out in recent weeks, driven by a rise in global gold prices. Gold has jumped lately as central bankers across the world signal their willingness to remain accommodative despite building inflationary pressures. A fall in the AUD/USD has also been positive for local gold miners, with the dynamic seeing gold denominated in AUD’s fetch $2450 per ounce. NST shares have broken trendline resistance now, with the weekly RSI turning higher and signalling building upside momentum. The next level of resistance to watch sits around $10.85, while support can be found at previous resistance at around $9.90.

AGL Energy (AGL)

AGL Energy Ltd shares remain entrenched in a downtrend right now, as the company comes under pressure as the global ESG push, combined with weaker revenues from fossil fuels, put the company’s stock out of favour. Even in light of the global energy crisis, which has seen renewed buying of “old energy” stocks, AGL’s share price has continued to plumb new lows. The stock is in a downward trend channel, with a weekly RSI deeply in oversold territory indicative of still considerable downside momentum. A break below support at the recent lower-low of $5.30 could open up a further drop for the stock. While a break-through top of the trend channel around $5.80 could signal a bottoming out for the stock and open up a rally to resistance at $6.15.

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