China Everbright Ltd – Daily timeframe
*Entry Price: 0.430 Stop loss : 0.385 Take profit : 0.490
*China Everbright Ltd will be added to the Phillip 20 Portfolio once the trade is triggered
Current Sentiment: Bullish
Support 1: 0.405 Resistance 1: 0.460
Support 2: 0.390 Resistance 2: 0.490
Price has been moving in a depressed manner since January 2018 after the immediate top formed at 0.475. Since then, price continued to test the key support area at 0.410 and eventually broke below it. Keep in mind the 0.475 support area is an important level because it has kept a floor on price since January 2016 and has successfully lifted price back up on three different occasions in the past two years.
The recent bearish break below the 0.475 in April signals further weakness, but with the benefit of hindsight, price might be forming a near-term bottom soon. The bearish follow through appeared limited after price broke below the 0.475 support area. After price formed a new 52-weeks low at 0.390 on 20/04/18, there seemed to be some consolidation. In addition, the recent selloff has also led the Relative Strength Index (RSI) into the oversold condition on 20/04/18 signals for a mean reversion higher next.
The recent bullish price action is also signalling for a near-term bottoming price action next with a bullish break above the 0.405 range high on 30/04/18. Moreover, the bullish break was backed by increasing volume.
Expect a reversal higher next for price to test the 0.460 resistance area followed by 0.490.
Note: Our current fundamental view on China Everbright is a Buy rating with a fair value of $0.60.
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