Medium-term technical outlook on Haitong Securities (HKG: 6837)
(Click to enlarge charts)
Key technical elements
- Since its failure to break above its major range resistance of 15.24/15.50 formed from 09 November 2015/30 November 2016, Haitong Securities has been evolving within a medium—term bearish descending channel from 30 November 2016 high.
- Recent price has staged a bearish breakdown on Monday, 12 June from its bearish “Flag” continuation pattern in place since 05 May 2017 low. The breakdown has been accompanied by a relative high volume reading above its five day average volume.
- The significant medium-term resistance now stands at 13.38 which is defined by the top of the broken down bearish “Flag” and the median line of the aforementioned descending channel.
- The significant medium-term support rests at the 11.70/11.56 zone which is defined by the lower boundary of the descending channel, the congestion area that consist the swing low of 20 May 2017 /swing high of 29 January 2017 and a Fibonacci cluster.
- The daily RSI oscillator remains bearish below its corresponding descending trendline resistance and still has room for further potential downside before it reaches an extreme oversold level of 18% since 18 April 2017. These observations suggest the medium-term downside momentum of price action remains intact.
- Relative strength analysis suggest that Haitong Securities is likely to continue to underperform 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)
Intermediate resistance: 12.88
Pivot (key resistance): 13.88
Supports: 12.28 & 11.70/11.56
Next resistance: 14.24
Therefore as long as the 13.88 pivotal resistance holds, Haitong Securities is likely to see another potential downleg to retest the 12.28 swing low of 08 May 2017 before targeting the next support zone of 11.70/11.56.
On the other hand, a clearance above 13.38 may negate the preferred bearish bias for a squeeze up to retest the descending channel resistance at 14.24.
Charts are from eSignal
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