CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Featured Trade HK Stock Kingsoft eyeing to test its major support

Article By: ,  Financial Analyst

Medium-term technical outlook (1-3 weeks) on Kingsoft Corporation (HKG 3888)



Key technical elements

  • Kingsoft, a major Chinese software company that has key operations in video gaming development, mobile apps, cloud storage platforms and office software has continued to evolve inside a major “descending range” configuration since its all-time high level of 34.95 printed in May 2015. The lower boundary of the major “descending range” is now acting as a support at 9.17 which also confluences with a Fibonacci projection cluster level at 8.42 (see weekly chart).
  • In the medium-term, the share price of Kingsoft has declined by 67% from its 21 Mar 2018 high of 31.10 and continues to evolve within a descending channel with its resistance at 13.76 (see daily chart).
  • From its recent low of 10.06 printed on 30 Oct 2016, its price action has staged a rebound in a “Bearish Flag” configuration with declining/lacklustre volume. These observations suggest a “dead cat bounce” where a fresh impulsive down move shall materialise next (see daily chart).
  • Longer-term momentum analysis as indicated from the weekly RSI oscillator remains bearish as it is still capped by a significant corresponding resistance at the 43 level without any bullish divergence signal.
  • The key medium-term resistance stands at 15.36 which is defined by the swing high areas of 22 Aug/28 Sep 2018 and the 23.6% Fibonacci retracement of the on-going medium-term down move from 21 Mar high to 30 Oct 2018 low.

Key Levels (1 to 3 weeks)

Immediate resistance: 13.76

Pivot (key resistance): 15.36

Support: 9.17/8.42

Next resistance: 20.65/22.35

Conclusion

The medium-term downtrend remains intact for Kingsoft. As long as the 15.36 key medium-term pivotal resistance is not surpassed, its share price is likely to stage another round of potential downleg to target the key major “descending range” support at 9.17/8.42.

However, a clearance above 15.36 negates the bearish tone for an extension of the corrective rebound towards the next resistance at the 20.65/22.35 zone (former congestion area from 20 Nov 2017/10 Jul 2018 & 50% Fibonacci retracement of the on-going medium-term down move from 21 Mar high to 30 Oct 2018 low).

Charts are from eSignal



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