Technical Pulse: UMS Ltd December 6, 2017

TAKE PROFIT

UMS Ltd – Monthly timeframe (Update from 29 September 2017)

6 DEC

Take profit: 0.985

Current Sentiment: Bearish

Support 1: 0.940                   Resistance 1: 1.075

Support 2: 0.825                   Resistance 2: 1.180

The long-term uptrend resumed as expected after the last update as price broke another new record above the 1.000 psychological round number thereafter. However, price might be in the midst of a major trend reversal to the downside after it hit a new 52-week high of 1.180 on 22/11/17.

On the monthly timeframe, the heavy selling at the end of November resulted in price forming a noteworthy shooting star in November. Moreover, the bearish price action happened with an extremely overbought Relative Strength Index (RSI) at 74 signals a high likelihood of a reversal to the downside next. Notice how the extremely overbought RSI in the past tends to lead to a sharp correction in price shown by the highlighted boxes.

Expect price to remain depressed moving forward as it goes through a period of correction.

Hence, with the current bearish price action on the monthly timeframe, we have decided to close out our position in UMS since 29 September at 0.985. As a result, this trade contributed to an equal-weighted gain of +1.17% to the “Phillip 20 Portfolio.”

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About the author

Profile photo of Jeremy Ng

Jeremy Ng
Investment Analyst
Phillip Securities Research Pte Ltd

Jeremy specialises in Technical Analysis and has 10 years of experience in studying price action. His areas of expertise include intermarket analysis on the equities, currencies, commodities and bonds market.

He graduated with a Bachelor of Science in Banking and Finance from University of London.

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