hk stock focus medium term uptrend remains intact for bank of china 1853052017

Since our last analysis dated on 06 December 2016, Bank of China (HKG: 3988) had rallied as expected and met our first upside target/resistance of 3.88/91 (printed a high of 4.08 on 16 February 2017) before it staged a 11% pull-back (click here for a recap).

Now, let’s us examine its latest technical elements.

Medium-term technical outlook on Bank of China (HKG: 3988)

(Click to enlarge charts)

Key technical elements

• Since its 24 June 2016 low of 2.90, the medium-term multi-month uptrend for Bank of China remains intact as it continues to evolve within a bullish ascending channel. The upper boundary of the ascending channel now stands at 4.25/4.36 which also confluences with the former congestion range support seen between 19 Jan/10 Mar 2015 before a steep decline of 33% occurred that led to it to print a low of 2.83 in February 2016 and also a Fibonacci cluster (see weekly & daily charts).
• The key medium-term support now rests at 3.79/72 which is defined by the pull-back support of the former broken descending trendlline resistance from 16 February 2017 high and the lower boundary of the aforementioned ascending channel (see daily chart).
• The daily RSI oscillator remains bullish above its corresponding support at the 53% level. In addition, it still has room for further potential upside before it reaches an extreme overbought level of 86% since 10 April 2015 that has led to major swing high of 5.68 seen on 28 April 2016. These observations suggest that medium-term upside momentum of price action remains intact.

Key levels (1 to 3 months)

Pivot (key support): 3.79/72

Resistances: 4.08 & 4.25/4.36

Next support: 3.30

Conclusion

Therefore, as long as the 3.79/72 pivotal support holds, Bank of China is likely to shape another upleg to retest its intermediate resistance at 4.08 (16 Feb 2017 high) before targeting 4.25/4.36 next.

However, failure to hold above 3.79/72 may damage the medium-term uptrend to trigger a correction towards the next support at 3.30 (former congestion range top from 14 Apr/08 Jun 2016 & the 61.8% Fibonacci retracement of the up move from 12 February 2016 low to 16 February 2017 high).

Charts are from eSignal

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