Shares of Commonwealth Bank (CBA) have been trading below the 30-day moving average of $83.80 for the last four consecutive trading sessions.
As the technical picture continues to deteriorate, we have looked at some previous chart resistance levels which could now act as price support.
You're not a member! Trial today
Between late January and early February, CBA tested the $81.10 level three times over the course of 10 trading sessions; this will be the first key support level.
However, going back to May of last year, CBA shares failed to break above $80.00 five times before extending higher in July. We feel that this is a more significant support level and a reasonable medium-term target.
Investors and subscribers will remember that we sold European-style call options on CBA in late January. By selling the $83.01 strike-price into March, we were able to collect $2.50 in option premium and still hold the shares to collect the $2.00 dividend paid in February.
Those options will expire this Thursday.
As such, we will look to reset the derivative overlay strategy in CBA on corrective price moves higher.
