Technical Pulse: China Merchant Bank Co Ltd May 6, 2021 204

 

China Merchants Bank (HKEX: 3968) is looking to break the curse of ranging after consolidating for 3 months:

 

  1. 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.
  2. Furthermore, the cup and handle formation indicate further break to the upside and the handle/flag is another confirmation to the potential upside.
  3. 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

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