HK Stock Focus Positive signals emerge in Geely Automobile

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By :  ,  Financial Analyst

Medium-term technical outlook (1-3months) on Geely Automobile (HKG: 0175)

Key technical elements

  • The recent 33% plunge from its current time of high level of 29.80 printed on 22 Nov 2017 has managed to stall at a key medium-term support zone of 20.00.
  • The aforementioned key medium-term support of 20.00 is defined by the lower boundary of an ascending channel in place since Feb 2016 low, the former range resistance of 08/15 Sep 2017 and a Fibonacci cluster (38.2% Fibonacci retracement of the up move from 23 Dec 2016 low to 22 Nov 2017 current all-time high & the 1.382 Fibonacci projection of the decline from 22 Nov 2017 high to 07 Dec 2017 low projected from 04 Jan 2018 high.
  • Positive signs have emerged at the 20.00 key medium-term support. The stock price has formed a daily bullish reversal “Hammer” candlestick pattern on 09 Feb 2018, the daily RSI has staged a bullish breakout above its former descending resistance at the 50% on 26 Feb that indicates an upside momentum follow-through after it has reversed up from its oversold region. Lastly, a corresponding gapped up in price action seen yesterday, 26 Feb above the 23.55 neckline support of the bearish “Head & Shoulders” chart configuration/pattern which has invalidated the prior bearish breakdown triggered on 06 Feb 2018 (see daily chart).
  • The next significant medium-term resistance stands at the 33.90 (a Fibonacci projection cluster derived from 4.236 projection of the earlier up move from the 2.76 major Feb 2016 low to 26 Oct 2016 high projected from 23 Dec 2016 low and the 0.618 projection of the up move from 23 Dec 2016 low to 22 Nov 2017 all-time high projected from the recent medium-term swing low of  09 Feb 2018 (see daily chart).

Key levels (1 to 3 months)

Intermediate support: 23.55 (gapped up seen on 26 Feb)

Pivot (key support): 20.00

Resistances: 29.80 & 33.90

Next supports: 12.93/60


Technical analysis of the stock price of Geely Automobile suggests that its primary uptrend in place since Feb 2016 remains intact and looks set to resume a potential impulsive medium-term upleg after a recent correction of 33% seen from its current all-time high printed on 22 Nov 2017.

Therefore as long as the 20.00 key medium-term pivotal support holds, Geely Automobile is likely to stage another potential upleg to retest the 29.80 current all-time high level in the first step before targeting the next resistance at 33.90.

On the other hand, failure to hold above 20.00 should demage its primary uptrend and kick-start a pronounced corrective towards the next support at 12.93/60 zone (the former swing high area of 14 Mar/29 Mar 2017 & the 61.8% Fibonacci retracement of the whole primary up move from Feb 2016 low to 22 Nov 2017).

Charts are from eSignal

Related tags: Shares market

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