ThaiBev Ltd – Daily timeframe
*Entry Price: 0.655 Stop loss: 0.595 Take profit: 0.750
*ThaiBev Ltd will be added to the Phillip 20 Portfolio once the trade is triggered
Price has been stuck in a steep downtrend since November 2017 as the 20 and 60 day moving average relentlessly capped the recovery. Price has fallen as much as –38% off the November high of 0.985 to the new 52-week low of 0.605.
Despite price breaking a new 52-week low recently, the bearish momentum appears to be fading. The 0.600 psychological round number held up and seemed to be keeping a floor on price for now. Some sign of strength appeared on 31/08/18 after price rejected the 0.600 psychological round number and formed a dragonfly doji.
Keep in mind the recent selloff has taken the Relative Strength Index into the oversold territory since 15/08/18 suggests an imminent rebound higher. RSI measures momentum. A reading above 70 represents overbought condition while a reading below 30 represents oversold condition. The past few times the RSI entered into oversold condition, an average rebound of +9% happened shown by the highlighted boxes.
Thus, with the current bullish follow through on 03/09/18 after the dragonfly doji rejection, the RSI has risen back above the 30 oversold condition signals the start of the mean reversion higher next. Moreover, price has also broken above the immediate pullback line shows further sign of strength.
Expect price to make a near-term rebound next for price to test the 0.675 resistance area followed by 0.740.
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