Technical Pulse: China Everbright Ltd May 2, 2018 592

Technical Buy

China Everbright Ltd – Daily timeframe

2 may

*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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About the author

Profile photo of Jeremy Ng

Jeremy Ng
Research Analyst
Phillip Securities Research Pte Ltd

Jeremy specialises in Technical Analysis and has 10 years of experience in studying price action. His areas of expertise include intermarket analysis on the equities, currencies, commodities and bonds market.

He is also a regular columnist on The Business Times - every Monday ChartPoint column.

He graduated with a Bachelor of Science in Banking and Finance from University of London.

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