Sunny Optical (HKEX: 2382) has been ranging for 2 quarters despite a strong upside break in August based on our report dated 30^th July. The subsequent head and shoulder formation has pushed prices back below HK$200 psychological level. However, recent technicals indicate that there is potential upside :   

1. The hammer with a long lower shadow on 12^th October which rebounded from the key support zone 1 was confirmed by last Friday’s bullish candle.
2. Bullish candle has also broken above 61.8% Fibonacci retracement level.
3. Although Ichimoku signals a bearish trend, last Friday’s bullish candle closed above the Tenkan-Sen. Should prices continue to break past 50.00% Fibonacci retracement, it will be a clear confirmation of the smaller double bottom at support zone 1.
4. The RSI indicates a bullish divergence. Furthermore, RSI shows slight closure above the 40 oversold support line.

*Expected timeline of the trade is 8 weeks from the date of report issuance.

CHART LEGEND

Ichimoku Kinko Hyo

Red dotted line = 26 periods Kijun-Sen

Blue dotted line = 9 Periods Tenkan-Sen

Green Line B= 52 periods Senkou Span B

Pink Line A = 26 periods Senkou Span A

Black line = 26 periods Chikou Span. Lagging line