Phat squiggly lines: October 2021

Phat squiggly lines is where pro traders get a technical take on the stock markets – with Kieran Neeson, Opentrader's in-house trading guru.

Market overview

The ASX 200 (ASX:XJO) continues to consolidate around current levels (7200-7400) in what has been another volatile week. 

The market has been dragged down recently due to rising inflation fears, debt ceiling dramas in the US, and heavily indebted Chinese property developer Evergrande spooking markets as it teeters on the verge of collapse. This has led to a circa 5% pullback in the ASX 200 and a reset of support at around 7200 points.  

 A solid performance today however has pushed the market up to the top end of the newly formed channel, which is changing the short-term technical outlook somewhat. 

The preferred scenario from here would be to see the market consolidate around current levels and hold above 7200, although a short sharp selloff in the coming weeks wouldn’t surprise and would likely create a great buying opportunity into the tail end of the year.  

Phat squiggly lines 14 October 2021 chart 1
  1. Strong support at 7164-7200 
  2. Testing downtrend resistance at 7344

Stocks to watch

BetMakers (ASX:BET)  

Last week we put out a note on BetMakers with a mildly bullish bias which thus far has played out as we expected. We had an initial profit target of $1.15 which the stock hit today representing a +10.5% move since we published the article.  

The stock has now reached the 50-day moving average which can typically be a point of resistance, so we are monitoring the share price closely from here after its initial move higher.   

Should the stock manage to hold this level and consolidate in the coming days, the next logical upside target is around $1.25 which is also the next key resistance level.  

This puts us in a great position to raise our stop-loss to our entry level ($1.04) to mitigate risks, and limit losses to break even should the stock roll over from here. 

Phat squiggly lines 14 October 2021 chart 2
  1.  Strong support at $1.02 
  2. Short term resistance at $1.15 in line with 50 day moving average 
  3. Next profit target 

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WiseTech (ASX:WTC) 

Logistics solutions technology company WiseTech has been on an absolute tear over the past couple months and has skyrocketed to all-time highs after releasing bumper FY21 profit results back in August. 

The logistics sector has had many headwinds to overcome since the fallout from COVID which has led to importers and manufacturers alike looking for ways to reduce operating expenses by using technology to improve efficiencies in the face of increasing global shipping costs. This bodes well for WiseTech, which is supported by the short-term technical picture.  

After consolidating over the past few weeks, the stock is looking likely to retest recent highs which if breached would signal a bullish technical breakout. This would lead to new all-time highs being reached and an initial profit target of around $60.  

Phat squiggly lines 14 October 2021 chart 3
  1. Initial break to new all-time highs 
  2. Resistance  
  3. Retest of most recent high/resistance

Hold on a sec! You should consider whether any advice here is right for you. We don’t accept any responsibility for the accuracy of any information, opinions, or predictions we’ve provided, and we certainly haven’t taken your personal financial situation into account. Just a heads-up.

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