hk stock focus china life back at ascending channel support 2693942017

Medium-term technical outlook on China Life (HKG: 2628)

(Click to enlarge charts)

Key technical elements

• The recent 3-weeks of pull-back (-9%) from its 31 May 2017 high of 26.05 has led the China Life to revert back to the lower boundary of the medium-term ascending channel in place since 16 June 2016 low at 23.65.
• The aforementioned ascending channel support of 23.65 also confluences with the 23.6% Fibonacci projection of the on-going medium-term uptrend in progress since 16 June 2016 low to 31 May 2017 high.
• The daily RSI oscillator has managed to stall a rebound at its corresponding support level of 37% which suggests that medium-term upside momentum of price action has resurfaced.
• The next significant resistance stands at the 27.50/28.17 zone which is defined by the upper boundary of the aforementioned ascending channel and a Fibonacci cluster (0.764 Fibonacci retracement of the down move from 26 October 2015 high to 16 June 2016 low & the 0.618 Fibonacci projection of the up move from 16 June 2016 low to 17 March 2017 high projected from 18 April 2017 low).
• Relative strength analysis suggest that China Life is likely to continue to outperform the benchmark HSCEI (an index that consists of China based “H” shares listed in the Hong Kong Stock Exchange) (refer to the last chart).

Key levels (1 to 3 months)

Pivot (key support): 23.65

Resistances: 26.05 & 27.50/28.17

Next support: 21.80/21.00

Conclusion

Therefore as long as the 23.65 pivotal support holds, China Life is likely to resume its potential bullish impulsive upleg within its medium-term uptrend to retest 26.05 (31 May 2017 swing high) before targeting the next resistance zone of 27.50/28.17.

However, a break below (daily close) 23.65 may invalidate the medium-term uptrend to open up scope for a corrective decline towards the next support at 21.80/21.00 in the first step.

Charts are from eSignal

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