JB Foods Ltd – Daily timeframe (Update from 10 April 2018)
Take profit: 0.650
Current Sentiment: Bearish
Support 1: 0.630 Resistance 1: 0.695
Support 2: 0.595 Resistance 2: 0.700
The uptrend proceeded along as expected after the last update but the recent price action suggests a reversal lower next. Price was consolidating around the 20 and 60 day moving average since 18/06/18. The real move came after an increasing volume bullish breakout above the 0.590 range high on 31/07/18.
Since the bullish breakout, price continued to surge to a high of 0.695 with increasing volume. However, with the strong bullish momentum, the Relative Strength Index (RSI) has also entered into the overbought territory. RSI measures momentum. A reading above 70 represents overbought condition while a reading below 30 represents oversold condition. The RSI hit an extreme high of 79 on 07/08/18 signalling for an imminent correction. Couple that with the current bearish price action, there is a high likelihood of a major correction lower next.
After hitting an intraday high of 0.695 on 08/08/18, bears dominated the rest of the day and closed price near the daily low. As a result, a surging volume Bearish Engulfing Bar was formed signalling a move lower next.
Expect price to head into a correction next for price to test the 0.595 supported area followed by 0.545.
Thus, with the current bearish price action, we have decided to close out our position in JB Foods at 0.650 in anticipation of a deeper correction. As a result, this trade contributed an equal-weighted gain of +0.51% to the “Phillip 20 Portfolio.”