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.