ASX200 outlook: Top 3 stocks to watch this week

Here are 3 stocks that have caught our eye and may be worth watching in the week ahead.

• Fortescue Metals Group Ltd (FMG)

• APT-AU (APT)

• a2 Milk Co Ltd (A2M)

Fortescue Metals Group (FMG)

A stabilisation in iron ore prices, which saw the commodity trade back towards $130 per tonne, helped mining stocks last week and eased the downward momentum for Fortescue Metals Group Ltd shares. Having dispensed with its post-pandemic uptrend, the primary trend for FMG is skewed lower now, though a fall into technical overbought territory on the weekly RSI suggests the move has stalled for now. Given the concerns about Chinese growth and demand for iron ore, risk-reward appears slightly skewed to the downside for FMG shares. A break above ~$15.30 per share would negate this and open further upside; while a push below support, around $12.80-$13.50 would likely see the downtrend extended.

Afterpay (APT)

APT-AU shares remain in a relatively tight-range right now, as the stock stays anchored to moves in Square Inc. shares, as the acquisition of the former by the latter plays-out. Tech stocks did manage to regain their lustre across the ASX 200 last week, though risks remain high because of the rise in long-term rates across the globe that’s putting downward pressure on growth stocks. Price momentum is very neutral for APT right now, with the weekly RSI flatlining around the 50 mark. There is a notable gap in the charts between $107-$114 that’s yet to be completely filled and may see APT shares drop in the short-term. On the upside, a break-above resistance at $135 could open a push higher, though that dynamic appears unlikely given the nature of the Square/Afterpay acquisition, where the purchase is tied to the value of Square shares.

A2 Milk (A2M)

Shares of a2 Milk Co Ltd spiked last week, thanks to signs that the Daigou trade channel is opening back as international trade and travel normalise following the major disruption wrought by the pandemic. Though clearly still in a down trend, there are signals price could be bottoming out now, with a double forming on the charts at around $5.20 per share, and the weekly RSI showing a clear bullish divergence. A break above $7.40 per share would be a strong indicator of further upside from here, with such a move opening the next resistance level just shy of $10.00.

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