Technical Pulse: China Sunsine Ltd July 25, 2018 862

China Sunsine Ltd – Daily timeframe (Update from 1 June 2018)

*Entry Price: 1.43    Stop loss: 1.22   Take profit: 1.63

*China Sunsine Ltd will be added to the Phillip 20 Portfolio once the trade is triggered

Support 1: 1.30                     Resistance 1: 1.55

Support 2: 1.25                     Resistance 2: 1.63

The bullish move was short-lived after the last update as price retested the 1.63 high in June. Since failing to close above the 1.63 high, price headed into a deep correction, resulting in price breaking below the 20, 60 day moving average and 1.43 support area.

However, with the sharp selloff of –22% from the 1.65 high in June, the Relative Strength Index (RSI) has entered into the oversold territory recently. RSI measures momentum. A reading above 70 represents overbought condition while a reading below 30 represents oversold condition. Since the RSI hit an extreme low of 25 on 09/07/18, price has been making a firm recovery. More importantly, the RSI has risen back above the 30 oversold level signals the start of a mean reversion higher for price.

Moreover, the recent sharp selloff was still firmly held up by the 1.25 long-term support area suggesting the long-term uptrend remains intact. In addition, the subsequent bullish follow through on 24/07/18 has broken price above the immediate downtrend line further validates the recovery and mean reversion higher is happening.

Thus, expect the long-term uptrend to resume next for price to test the 1.55 resistance area followed by 1.63.


Note: Our current fundamental view on China Sunsine is a Buy rating with a fair value of $1.97.

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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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