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Golden Agriculture: Negative divergence.

Thursday, November 11, 2010

On 8 Nov, I mentioned that "Even though a very long white candle formed today to close at the day's high of 78c, it is worth noting that volume was not as high as 13 Oct. The picture of negative divergence between volume and price is still present. Price moved higher today due to a lack of sellers and not an abundance of buyers. It would take a very brave person to load up to go long at this stage."


Although Golden Agriculture reported commendable results today with a 41% year on year increase in net profit to US$99 million (S$127 million) for the third quarter ending 30 Sep (3Q2010), the attempt by price to go higher was half hearted as it touched a high of 78.5c before closing at 76c. The very long upper wick on this short bodied white candle hints of strong selling pressure. Volume is relatively low and the negative divergence between price and volume is still all too visible.

Immediate support is at 75c and if this breaks, we could see 70c tested. This could well happen as both MFI and RSI are bordering on overbought and could retreat to retest their respective trendline supports. Buying on pullbacks is still the prudent thing to do.





Related post:
Golden Agriculture: Breaking resistance.

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