CSL Limited (ASX: CSL) specialises in biologically based health care products and the supply of blood products and vaccines.
The stock took off in 2003 when it was trading around $4. It posted a historical high price last year in May above $43. It means that the long-term bullish trend drove CSL 975% higher in exactly 5 years!! This 5-years rally is delimited on the weekly chart by extreme points A and B.
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At the end of 2008, a correction downward drove the stock back to $28, which is a key support level now. It corresponds to the 38.2% Fibonacci retracement ratio (point E) of the 5-years bullish trend, but also corresponds to two previous lows posted in June and August 2007 (points C and D).
On the daily chart: recently CSL was up during 2 months and a half, from mid-December to end of February. During this period the stock jumped from $28 to $38.5. A correction move has pulled back the price towards $35 ($35.45 was the closing price yesterday).
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The MACD triggered a bearish signal in late February when it crossed below its signal line. Yesterday it reached the zero line. A cross below this level would confirm that the price action is likely to continue lower. We would also wait for a confirmation by the moving average crossovers. The 21-day moving average (in red) has been the immediate support level when the stock rose in January and February.
The stock opened lower with a gap when it cleared out this support that may act now as the immediate resistance. This moving average has already started curving downward and a cross below the 40-day moving average (the “crossover”) would be indeed a new signal of weakness.
The 21-day technical momentum indicator has plunged below the 100 level. The bullish momentum is then over.
On the medium-term, the price objectives are quite clear. $28 is the target on the downside whereas $42 is the main target on the upside (point F). Currently the stock is exactly at equivalent distance of those 2 levels (in terms of Dollars and not in terms of percentage of course).
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