Australian banks are currently trading at lofty levels and close to significant chart resistance points.
We consider CBA to be most vulnerable to a down side correction considering the technical pattern and the premium at which it trades to its peers.
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Going back to December 2015, there have been four occasions when CBA shares traded into the $85.00 to $86.00 price range before rolling over for a 5 to 10% correction. At this point, we are looking for a technical move back to the $80.00 level.
Fundamentally, huge consumer debt burdens, stagnant domestic wages growth and an overheated housing market will likely act as a headwind to further meaningful price appreciation.
Investors holding long CBA positions can look to sell covered calls into June, or buy the May $83.00 outright put option.
Suzanne Jarvis says:
May I ask which charting software is being used, please?