Technical outlook – At present, Woolworths (WOW) has held to a healthy rally since rebounding at the start of this year from $36.00.
With much surprise and determination, the bullish trek is now displaying “bearish divergence”.
In technical analysis, divergence can be a significant warning signal that a bullish or bearish trend is coming near to an end.
Divergence appears when a technical indicator (oscillator) begins to establish a trend that disagrees with the actual price movement.
These “disagreements” are strong signals and somewhat useful for the trader/investor.
Bearish divergence happens when the price of the asset reaches a new high, but the indicator fails to do the same and instead closes lower than the previous high.
It is in our view that Woolworths (WOW) is soon likely to stage a course correction, but would first wait and see if $44.00 is challenged and rejection.
If so, this, in terms, would put (WOW) on a course correction to $41.00. Reassess from there.
Company Overview – Woolworths (WOW) is a retailer with primary activities in Supermarkets. WOW’s other operations include BIGW discount department stores; Home Improvement; Petrol through the Woolworths/Caltex alliance; and Hotels. Former Names: Woolworths Limited (WOW), 08/12/2017