Volume expanded nicely as a wickless white candle was formed. Price broke resistance at 29c as provided by the 20dMA and closed at 32c resistance, provided by the 50dMA. Is this the extent of the upmove or would the price move higher? The RSI has been forming higher lows of late. The MFI too. Momentum and demand are positive in the short term but it could be a reaction to the oversold situation.
If this is just a rebound, we could see the downtrend resistance at 33.5c capping further gains. The MACD is rising but still in negative territory. So, the possibility that this could be a short lived rebound cannot be discounted.
This counter has been in a downtrend since it peaked in Jun 09. Every single rally attempt was capped by downtrend resistance. Looking at the MFI over a longer period, we would realise that it has been forming lower highs since early this year. This affirms a longer term weakness in demand. So, for people considering a punt, be careful.
We want to see volume expand more significantly, taking out 33.5c resistance, if a reversal should take place. This would break out of the shorter term downtrend resistance. Next resistance level would be at 35c then.
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