HK Stock Focus Potential bullish breakout in BYD

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By :  ,  Financial Analyst
Medium-term technical outlook (1-3months) on BYD Company (HKG: 1211)

Key technical elements

  • The 27% decline from its recent 06 Oct 2017 swing high area of 81.80 has managed to stall at a 61.45 major pull-back support of a former ascending range resistance that has been taken out on 15 Sep 2017. Interestingly, the aforementioned decline has taken the form of “bullish flag” formation which represents a retracement of the steep rally seen after the bullish breakout on 15 Sep 2017. This “bullish flag” formation tends to represent a potential continuation of its prior up move after the break of the upper limit of the “flag” which is now acting as a near-term resistance at 72.50.
  • Another the positive sign is that today’s (12 Jan) push up from its minor swing low of 11 Jan 2018 has tested the upper limit of the “flag” with a higher volume from its previous 3-day average volume which indicates an increase in demand. In addition, the daily RSI oscillator has staged a presignal bullish breakout from its corresponding descending resistance which suggests a revival of medium-term upside momentum of price action.
  • The next significant medium-term resistance stands at the 88.40/92.50 zone which is defined by the major swing high area of Oct 2009 and a Fibonacci projection cluster.

Key levels (1 to 3 months)

Intermediate support: 67.00

Pivot (key support): 61.45

Resistances: 72.50, 81.80 & 88.40/92.50

Next supports: 56.95 & 52.00


Therefore as long as the 61.45 key medium-term pivotal support holds and a break above 72.50 is likely to reinforce the start of potential impulsive upleg to retest 81.80 (06 Oct 2017 swing high) to target the next resistance at the 88.40/92.50 zone.

On the hand, failure to hold above 61.45 should invalidate the bullish scenario to trigger an extension of the corrective decline towards the next supports at 56.95 follow by 52.00 (major ascending range support from Feb 2015).

Chart is from eSignal


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