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CapitaMalls Asia: Uptrend broken.

Wednesday, July 21, 2010

The longer term downtrend which was broken briefly for four sessions in late June is once again in play.  A series of rallies which started after the price hit a low of $1.91 on 7 May has come to an end.

On 16 July, charting revealed that "Prices are testing the support provided by the third fan line.  The uptrend has weakened from the initial fan line and it now looks exhausted. OBV shows clear distribution since price peaked on 23 Jun. From Monday to Thursday, volume expanded as price dropped.  Today, volume is lower and this is probably in response to the slightly oversold condition as suggested by the MFI.  Immediate support at $2.04 and immediate resistance at $2.10.  Closing below $2.04 in the next session would break the uptrend support and the price is likely to move lower from there."

Today, the support provided by the third fan line was compromised with price opening at $2.04 and closing at $2.02.  Volume expanded in the last two sessions as the price fell. MACD continues to fall in negative territory and OBV continues its decline, suggesting greater distribution than accumulation. However, MFI has risen out of the oversold territory. This suggests that there is still some demand and forms a positive divergence with price. This might limit somewhat the decline in price.

Could this decline below the third fan line possibly be a whipsaw to shake out the weaker long holders? It might be. Or could we see the previous low of $1.91 tested again?  If price continues to decline, Fibo lines suggests that this is quite possible. This counter is still looking for a bottom, it would seem.


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