China Mengniu Dairy (HKEX: 2319) has been in a corrective range after prices broke out of the corrective downtrend in May 2021. Despite breaking, there is not significant bullish upside and hence, we believe that the range condition between HK$53.85-HK$38.72 will be ranging for the mid-term outlook. Further technical indicate a bearish selling back to the lower boundary  of the range.

1. The bearish engulfing candle has reject the 61.8% Fibonacci retracement of the range between HK$53.85-HK$38.72.
2. This indicate a potential double top in the making.
3. Stochastic Oscillator indicate a potential overbought crosses, right above the 80 line.
4. The 63 and 200-EMA has been flatten out, indicate range bound momentum. Furthermore, these levels indicate a mean-reversion level.

*Timeline of the trade is 6 weeks from the date issued.  

CHART LEGENDS

Moving Averages

Red dotted line – 200 period MA

Blue dotted line – 63 period MA