Technical Pulse: Hi-P Ltd August 15, 2018 645

Technical Buy

Hi-P Ltd – Daily timeframe

*Entry Price: 1.06     Stop loss: 0.960     Take profit: 1.27

*Hi-P Ltd will be added to the Phillip 20 Portfolio once the trade is triggered

Current Sentiment: Bullish

Support 1: 1.00                   Resistance 1: 1.15

Support 2: 0.970                Resistance 2: 1.27

Price has been stuck in a steep downtrend since hitting a high of 2.79 in March 2018. The bearish momentum accelerated recently after price broke below the 1.15 support area in early August.

However, there seemed to be some support around the 1.000 psychological round number. Price fell to a new 52-week low of 0.960 on 13/08/18, but the closing was rather strong. Moreover, the subsequent bullish rejection off the 1.00 psychological round number signals a possible near-term rebound.

Keep in mind the recent sharp selloff since late July has led the Relative Strength Index (RSI) into the oversold condition where it hit a low of 29 on 10/08/18. RSI measures momentum. A reading above 70 represents overbought condition while a reading below 30 represents oversold condition. With the current bullish rejection, the RSI has recovered back above the 30 oversold region signals the start of a mean reversion higher next. Notice the last time the RSI was oversold in June, a rebound played out eventually after the RSI rose back above 30.

Hence, expect price to rebound next to retest the 1.15 resistance area followed by 1.270. The 1.00 psychological round number should provide some support in the near-term.

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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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