China Hongxing: Correction.

Recently, a reader asked me what do I think of China Hongxing. I have not done any fundamental analysis of this company, having gone in only once for a trade based on technical analaysis.

Looking at the charts, the 20d and 50d MAs are about to complete a dead cross while the MACD is declining in negative territory.  Momentum is clearly negative.  However, look at the OBV and we would notice that there is no massive distribution.  In fact, a quick look at the trading volume confirms that volume has been dwindling as price declined from the peak formed on 15 September. A low volume pullback is underway, it seems.

The 100dMA has just completed a golden cross with the 200dMA at 16c.  This is likely to be strong support level and would be ideal as an entry to go long on this counter. In the meantime, 17c is immediate support and could be a nice hedge in case price does not test support at 16c.

Related post:
China Hongxing: CD.