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.

Market wrap: ASX200 remains rangebound

The Australia 200 remains stuck in a range, with the index struggling to match the bullish sentiment keeping US and European equity indices elevated around record highs. Expectations of rate hikes from the RBA has diminished the appeal of Aussie stocks at the margins as long term rates rise. While falling iron ore prices at some weakness in pockets of the materials sector, along with a mixed bag of bank results have proven headwinds to the market.

Top 3 ASX stocks to watch

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

National Australia Bank (NAB)

National Australia Bank Ltd shares extended their recent uptrend in the past week, following full-year results that showed higher than expected profits, a doubling of the company’s dividend, on what proved to be very strong growth in business and mortgage lending. NAB’s shares remain in a clear uptrend right now, with momentum still skewed to the upside, although the weekly RSI has dropped below the key 70-level, suggesting a potential pullback in the stock. Any dip in the stock may be bought at trendline support around $28.50, with a break above resistance around $30 opening up a run to resistance at $33.00.

Commonwealth Bank of Australia

The Commonwealth Bank of Australia providing a trading up to the market this week, and judging by price action, appeared to disappoint investors, reporting weaking revenues and a rise in costs. Having hit fresh all-time highs last week, CBA shares uptrend looks at risk of reversal, with trendline support breaking and the weekly RSI turning lower from technically overbought territory. While a bounce in the very short-term may yet be on the cards, the risk-reward may be skewed to the downside for CBA in the longer run, with a breakthrough support at $99.00 opening up a potentially deeper sell-off to $90.00 per share.

Pilbara Minerals (PLS)

Lithium miners have surged on the ASX200 this year, as the push towards renewable energy drives demand for the commodity. Pilbara Minerals Limited has increased by interest this year as a result, with the stock testing resistance at record highs last week. The share price clearly remains in an uptrend. But looking at the weekly charts, it may be due to a pullback, with a clear divergence emerging between price and the weekly RSI. A failure to new record highs above $2.45 could see a drop in the stock, with the 20-week moving average at $2.04, a level where investors may “buy-the-dip”.

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