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Genting SP: A rebound or a reversal?

Sunday, December 5, 2010

Although I do not have any vested interest in Genting SP, I remain deeply interested in this highly liquid, highly volatile counter.

On 24 Nov, I mentioned that "We could see a rebound and if it does happen, resistance is at $2.10 which is where we find the 50dMA. Anyone who is thinking of reducing exposure could consider doing so here. After all, price goes down a river of hope and rarely in a straight line." In the last session, Genting SP closed at $2.09 after touching a high of $2.13.

The volume which accompanied the rise in price was not impressive. With the 20dMA poised to form a dead cross with the 50dMA, there could be more downward pressure.  The white candle formed was with a long upper wick which suggests selling pressure beyond $2.09. The MACD has turned up but it is doing so in negative territory which suggests that what we have is just a rebound and not a reversal.

I have also drawn lines in orange color connecting the highs of 20 Sep and 9 Nov as well as the lows of 30 Sep and 10 Nov. Do you see a rising wedge? It seems that this pattern is valid and the downside target is at least $1.85. Of course, if the next session sees an expansion of volume as price rises up, this reading would be invalidated.


la papillion said...

Hi AK,

Actually the rising wedge had to be accompanied by declining volumes. It's hard to decide if the volumes are declining enough to make the pattern valid, until it had happened.

Which is also why I don't rely so much on patterns as the determinant tell tale - it's just too subjective :)

What I do see is that there is a gap, which usually offers a good place to resist the price from increasing further. Gaps are quite significant, either as a support or resistance. Imagine you're holding at 2.3 level and it gaps down. You're going to swear that if it reaches there and you break even, you're gng to sell. A lot of people are caught at that level, judging from the volume. In terms of psychological resistance, gap should be one of the more significant ones.

I think the price will very difficulty going above that gap, at least for the time being.

Just sharing :)

AK71 said...

Hi Shi Gong LP,

Yes, wedges are not the most reliable patterns and it is hard to rely on them. I have been played out a few times by wedges before. :(

Thanks for sharing. Please keep your comments coming. :)

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