China Railway Construction (HK: 763) may continue experiencing a downtrend with technical indicators showing the following sentiments:

1. Since March 2019, the stock’s downtrend is clearly exhibited by the series of lower-highs till today. As such, the strong adherence to the bearish trend indicates validity of poorer sentiments.
2. The bearish Marubozu candle on Monday rejected the Fibonacci retracement level of 78.6% between $7.48 – $18. Similarly, the candle also rejected the 200-SMA and the supply area, indicating a strong selling pressure ahead.
3. Validity of the death cross formation remains valid as prices have been trending below the long term 200-SMA.
4. Stochastic Oscillator currently indicating a bearish overbought crossover which means that the return of the sellers to the market is imminent.
5. Target price will be the extension of $7.48 – $9.18 at the 161.8% Fibonacci extension level.

*Timeline of the trade should be between 1-3 weeks from the date issued.

CHART LEGENDS

Stochastic Oscillator

Period = 14

%K = 3

%D = 3

Red line = 80 Overbought

Blue line = 20 Oversold

Moving averages

Red line = 200 SMA

Blue line = 50SMA