Company Overview: Commonwealth Bank of Australia (ASX: CBA) provides financial services that serve approximately 15 million customers, providing retail and commercial banking services predominantly in Australia and New Zealand through its subsidiary, ASB. This Report covers the Price Action, Technical Indicators Analysis along with the Support Levels, Resistance Levels, and Recommendation on this one stock.
Commonwealth Bank of Australia (ASX: CBA)
Recent Update:
On 9 August 2023, CBA unveiled its FY23 results (for the 12 months ended 30 June 2023) and reported:
- Cash profit profits increased by 6% YoY to A$10.16 billion. Similarly, return on equity jumped 14% YoY. Subsequently, CBA decided to buy back AU$1 billion of stock and declared a final dividend of AU$2.40 per share, bringing total dividends for the year to a record of AU$4.50 (up from AU$3.85 per share in 2022).
- Despite a 5% YoY increase in operating expenses (due to inflation and additional staff), operating income increased by 13% YoY in FY23, reflecting organic volume growth and margin recovery.
- However, the Company also highlighted that higher living costs, and competition can squeeze margins and further escalate debt arrears.
- In terms of investments for the future, CBA invested AU$750 million to prevent frauds, scams, financial and cybercrime.
- On 14 February 2024, CBA has scheduled the release of H1 FY24 results.
Technical Analysis:
CBA's price is forming a symmetrical triangle pattern on the daily chart, indicating that the stock's sideways period might continue to persist in the near future. Additionally, the RSI (14-period) is fluctuating near the midpoint, providing further support to a sideways movement. Prices are trading above both the 21-period and 50-day SMAs, which may function as dynamic support levels for the stock; in contrast, the stock's most recent high might act as a resistance level. Crucial support for the stock is positioned at AUD 95.32, while key resistance is placed at AUD 111.43.
Daily Technical Chart – CBA
The stock was analysed as per the closing price of AUD 104.85 per share as on 09 August 2023, up by 2.58%. Commonwealth Bank of Australia (ASX: CBA) was last covered in a report dated ‘26 October 2022’.
Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest, taking into consideration the risk-reward scenario.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
Note 1: Past performance is neither an Indicator nor a guarantee of future performance.
Note 2: Investment decision should be made depending on an individual’s appetite for upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report.
Note 3: Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
The reference date for all price data, currency, technical indicators, support, and resistance levels is August 09, 2023.. The reference data in this report has been partly sourced from REFINITIV.
Technical Indicators Defined:
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
The Green colour line reflects the 21-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 21-period, prices are currently in a bullish trend (Vice – Versa).
The Blue colour line reflects the 50-period moving average. SMA helps to identify existing price trends. If the prices are trading above the 50-period, prices are currently in a bullish trend (Vice – Versa).
The Orange/ Yellow colour line represents the Trendline.
The Purple colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period), which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status, while a reading of 30 or below suggests an oversold status.
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