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.
Open account
☰
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.
Open account
✖

Featured Trade HK Stock Tencent trapped within a bearish flag

Article By: ,  Financial Analyst
September 26, 2018 5:52 AM

Medium-term technical outlook (1-3 weeks) on Tencent Holdings (HKG 0700)



Key technical elements

  • Tencent, a key component stock in the Hang Seng Index with a weightage of 9.25% (the second highest after HSBC) has evolved into a “bearish flag” range continuation configuration in place since 12 Sep 2018 low of 305.20.
  • The upper boundary of the “bearish flag stands at 343.60 which is also the lower limit of the recent gapped down in price action on 30/31 Aug 2018 and the 23.6% Fibonacci of the on-going medium-term downtrend in place since 29 Jan 2018 all- time high of 476.60 to 12 Sep 2018 low of 305.20.
  • The key medium-term resistance stands at 360.00 which is defined by the upper boundary of the medium-term descending channel from 21 Mar 2018 high, the upper limit of the gapped down in price action on 30/31 Aug 2018 and the pull-back resistance of the former ascending trendline support from Oct 2008.
  • The recent 3-week rebound from 12 Sep 2018 low of 305.20 is accompanied by lacklustre/declining volume with the daily RSI oscillator (a momentum indicator) that is still capped by its corresponding resistance at the 55 level.
  • The next medium-term support to watch will be at 272.00/269.80 which is defined by the lower boundary of the aforementioned medium-term descending channel and a Fibonacci projection cluster.

Key Levels (1 to 3 weeks)

Intermediate resistance: 343.60

Pivot (key resistance): 360.00

Supports: 319.00, 305.20 & 272.00/269.80

Next resistance: 398.00

Conclusion

The medium-term downtrend for Tencent remains intact and the recent rebound from the 12 Sep 2018 low of 305.20 seems to be more corrective in nature within a bearish impulsive down movement. Therefore, as long as the 360.00 key medium-term pivotal resistance is not surpassed and a break below 319.00 (lower boundary of the “bearish flag”) is likely to reinforce the start of a potential downleg to retest 305.20 before targeting the next support at 272.00/269.80.

On the other hand, a clearance above 360.00 shall damage the medium-term downtrend for a further corrective up move towards the next resistance at 398.00 (the former swing low area of 09 Feb/04 Apr 2018 & close to the 50% Fibonacci retracement of the decline from 29 Jan 2018 high to 12 Sep 2018 low).

Charts are from eSignal



StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

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. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024