ThinkTechnical 1 July

The theme for today's ThinkTechnical is 'technology stocks'.



Sure, they've been the best performers on the ASX since the covid-19 inspired March lows, with the Information Technology (XIJ) index up an eye-watering 85% compared to a gain of 30% for the broader market ASX300.

The question is: How much gas is left in the tank?

We'll attempt to answer that question today by looking at 3 key stocks from the Info Tech sector.

 

APX is in a clearly defined and strong short term and long term uptrend as evidenced by solidly rising short term and long term moving averages.

Static resistance from the 24 June high of $35.56 continues to dominate the chart in the short term.

Static support will likely be found on any pullbacks to into the zone defined by the 29 June low of $33.05 and the 27 May high of $32.30.

With regards to setting up a possible trade on APX, short term dynamic resistance is typically a sound zone to use as a reference guide for setting a stop loss. This zone is defined by the short term moving averages, presently at $31.15, and $32.35.

If APX can close above the 24 June high, it will once again be trading in record territory, and therefore targets are fairly open ended with only the psychological resistance of the $40 round number to contend with.
 
 

XRO is in a clearly defined and strong short term uptrend and long term uptrend as evidenced by solidly rising short term and long term moving averages.

Its price action over the past 2 weeks has compressed within a tight trading range between the 24 June high of $91.94 and the 23 June low of $87.93. This range is a direct response to the static support from the 4 June high of $91.49.

With two weeks of probing supply in this zone under its belt, today it appears to be testing a breakout. A confident close (i.e. a high close on the session) today above $91.94 would be supportive of a near-term test of the psychologic $100 round number resistance.

Perhaps the most attractive attribute of the XRO technical picture at the moment is the close proximity of the current price to the dynamic support zone defined by the short term moving averages.

This, along with the 23 June low of $87.93 offers traders a logical and relatively safe point beneath which a stop loss can be set as the basis for a long trade.

 

Unlike APX and XRO, MP1 has moved into a short term downtrend over the past couple of weeks. This is not necessarily a bad thing however, as it brings the price closer to the long term dynamic support zone defined by the 144-23 EMAs.

Importantly, these EMAs demonstrate that MP1 remains in a well-defined and substantial long term uptrend. It is generally prudent to look for pullbacks within such a strong long term trend for buying opportunities.

Also, the close proximity of the current price to this zone enables traders to set a sound stop loss just below this zone, therefore improving the reward-to-risk profile of a potential trade.

Note that dynamic long term support is further reinforced by the static support offered by the 30 June low of $11.78. This further improves the protection offered to stops set below the dynamic support zone.

Looking towards the upside, the short term moving averages will likely impede progress as they offer dynamic resistance around $12.90-$13.00. Static resistance at the 22 May $12.76 low may also be an issue.

If MP1 can close confidently above the $12.76-$13.00 zone, then targets are at least to the static resistance from the 11 June all-time high at $15.50. Beyond that point, all-time highs beckon.