A2M Bullish ascending

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By :  ,  Financial Analyst

A2M remains a buy the story, and not the numbers chart. In a recent report during July 2018, by A2M, the company flagged higher marketing expenditure as a percentage of sales in FY2019 compared to FY2018, with further expansion into U.S. markets. In short the company is spending more of the earnings from revenue on marketing.

Part of the higher overhead costs in FY2019 over previous years is due to increasing headcount in China. As a positive Synlait Milk Ltd says it extended its supply deal with a2 Milk by two years, the supply side of the business remains very much intact. For the longer term investor the story remains very much intact with a growing global presence and increasing revenue.

The daily chart of A2M highlights the large price ranges primarily between the $11.80 highs and the recent $8.13 low. The current price consolidation in the form of an ascending triangle pattern, has set 3 HLs (higher low) points in price as price moves back to the $10.00 highs, this type of pattern is now considered complete.

Using the Relative strength Indicator (14), a swing from below the key 50 level has occurred and further movement over this “50” level would be very positive on future price momentum.

A2 Milk Co Ltd CFD graph

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