Stock: Insurance Australia Group Ltd
Taking a 15-year look back in the rearview mirror at shares in Insurance Australia Group Ltd (IAG ASX) we can see from 2005 to 2007 a double top at the $6.60 level which formed long-term major resistance in the process. After the second test and failure at the $6.60 level price entered a sustained 5-year downward spiral, breaking through $4.85 previous support on its way down to form and test a multi-year low at $2.74. The rebound off the $2.74 low saw price run up to again test and reject the $6.60 major resistance level by the start of 2015. In June of 2015 Warren Buffets Berkshire Hathaway made an entry on to the IAG share register with a 89,766,607 unit stake at $5.57 per share totaling $500,000,000. In a move that proved not even the best can successfully pick the exact low, price continued to slide, falling back to test and hold $4.85 major support before commencing a 2-year run that saw the price nearly double on its way up to test an all-time high around $8.69. Having now rotated down from the highs, price is now poised back above $7.37 near term support. On this long-term monthly chart timeframe view, we can clearly see and define the buy zone as being between the $6.60 and $7.37 levels.
Narrowing our view of IAG down to the daily chart timeframe view, we can see that there are other support and resistance levels that become apparent, namely $6.10 on the support side, and a key level that has acted as both resistance and support at $7.00.
What Does IAG Do?
Formed in 2002 when NRMA Insurance Group Ltd became Insurance Australia Group Ltd, the company provides a range of personal and commercial insurance products offered under several well-known brands. Primary operations are located in Australia, New Zealand & Asia with joint venture interests also held in China, Malaysia & India.
To access a list of IAG Ltd announcements, financial summary & dividend history – Click Here.
The Baron’s Brief – Official Summary
Anyone who had employed an “If it’s good enough for Warren it’s good enough for me!” approach would have enjoyed solid gains in IAG to date. Having now topped out at the all-time high of $8.69 it is a matter of how deep the rotation down will go.
Should price find its way back to the key $6.60 support level at the bottom of the buy zone, The Baron would anticipate significant buying pressure to show its hand.
In the event that the pullback is not as deep as $6.60, traders can watch for buying action around the $7.00 level within the buy zone for a signal that another move north could be imminent.
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Disclaimer: The information contained in this article has been prepared solely for the entertainment & educational purposes of the reader and does NOT constitute financial or investment advice. Any examples presented in this article are for illustration purposes only. No person, persons or organisation are authorised or permitted by the authors to take any action on the reliance of this information without first consulting an authorised, accredited financial planner or advisor. The authors are entitled, at their sole discretion, to hold positions in the above-mentioned stock/s. The authors accept no responsibility for the accuracy, completeness or timeliness of the information contained in this article. Disclosure – No positions are currently held in IAG – ASX at the time of publishing this article (This is a disclosure and NOT A RECOMMENDATION).