Meituan (HK: 3690) the rally in price may be heading for a temporary bearish correction as the technicals indicate:

1. The stock has formed a head and shoulder formation pending for a breakout of the neck line resistance at 90.89.
2. Candlestick price action reflects the bullish momentum weakening. The bullish pin bar on Tuesday was a good rebound as it was forming a potential bottom at 95.00. However, the next candle on Wednesday was a strong bearish candle with little shadow. This illustrates that the stock is regaining its bearish momentum in-lieu of the bigger head and shoulder formation.
3. Both the bullish pin bar and the strong bearish candle failed to break 100.00 psychological level, indicating a weakening bull.

*The technical call is valid only for 3 weeks.

*The bullish rebound may happen at 127.2% or 161.8% extension level.

CHART LEGENDS

Moving averages

Red line = 200 SMA

Blue line = 50SMA