Tencent (HK: 700) strong rally since mid-March has gained momentum. Based on the technicals, we expect Tencent to continue making new highs:
- Tencent has been making a series of higher highs and higher lows, indicating a strong uptrend.
- There seems to be a pause in rally after the stock broke above HK$550.00 thrice. The momentum is not slowing down. The stock has formed an ascending triangle, which is a strong continuation pattern.
- Looking at the price action of the stock within the ascending triangle, prices have found strong support at 61.8% Fibonacci retracement level of the ascending triangle. Next, the hammer on Monday managed to close above 38.2% Fibonacci retracement level and this is a strong indication of a potential rally ahead.
*The technical call is valid only for 2 weeks.
CHART LEGENDS
Moving average
Red dotted line = 200 periods Moving average
Blue dotted line = 50 periods Moving average
