China Merchants Bank (HKEX: 3968) is looking to break the curse of ranging after consolidating for 3 months:
- The false breakout of the Diamond pattern is confirmed after the 2nd re-test of the support zone at HK$56.40-HK$58.55 and nearing the support of the uptrend line. Despite the stock not making any higher highs, the multiple testing of the resistance zone at HK$67.55-HK$69.65 resistance zone has weakened it.
- Furthermore, the cup and handle formation indicate further break to the upside and the handle/flag is another confirmation to the potential upside.
- The morning star formation has closed above the 50-day moving average indicate mid-term potential upside.
*Expected timeline of the trade is 8 weeks from the date of report issuance.
CHART LEGEND
Moving average
Red dotted line = 200 period Moving Average
Blue dotted line = 50 period Moving Average
Green dotted line = 22 period Moving Average
