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CapitaMalls Asia: Closed at $1.89.

Thursday, January 27, 2011

Price closed below the trendline support today at $1.89. I would not advise buying more at this price since the uptrend is compromised. I have turned cautious. However, notice that the trading volume is, once again, very thin on a black candle day. It looks to me to be a continuation of a low volume pull back pattern.


Does low volume mean that price could not weaken further? Definitely not but if we look at the OBV, it is obvious that there isn't any distribution activity. In fact, if you ask me, the OBV has gone up slightly in the last 4 sessions which suggests mild accumulation. This is consistent with what I said in my last blog post that there are bargain hunters out there who are waiting to buy at lower prices.

So, what am I looking out for now? The previous low was at $1.87. This was formed earlier this month. Will price form a higher low at $1.89 and recapture the uptrend later on? Of course, we might have to draw a gentler trendline support too. Or will the price go down further to test $1.83? No one has the answer but with the very low volumes as price pulled back, I do not think there would be any drastic sell downs in the near future. I would wait for the situation to become clearer before making my next move.

Related post:
CapitaMalls Asia: Doji at $1.91.

6 comments:

Anonymous said...

Hi,

Can you do a post on China Animal Healthcare based on TA and FA. I think many people interested in this company. Thanks lots

Janice

la papillion said...

Hi AK,

From what I know, when the market is moving up, we need high volume to confirm that the upward movement is definitive. However, when the market is trending downwards, it need not high volume for it to be definitive. With the macd lines crossing bearishly, that's addition 'proof' that we could be seeing at least a short term downside to test the next support level.

I'm short-term bearish on this, but mid term bullish on this.

This is getting interesting :)

AK71 said...

Hi Janice,

I usually blog about companies which I have an interest in or developing an interest in. Currently, no interest in China Animal Healthcare. ;)

AK71 said...

Hi LP,

Thank you so much for sharing your insights on this one.

Yes, the rising MACD, being in negative territory, hints that the rising price in previous sessions could just be a brief rebound in a downtrend. This is also why I mentioned that if price closed below the trendline support, I would turn cautious and not buy more.

The fundamentals are strong while technicals are weak. We have a probable setup with a lot of positive potential.

I already have a long position here and will wait and see now. :)

Limestone said...

Hi:

I may too be wrong on this, but i see a bearish flag pattern for this counter actually, though volume is not typical of a flag. if it's true, the counter might continue to fall.

AK71 said...

Hi Limestone,

I am waiting to see if the $1.83 low would hold up as support. Not adding until the signs are clearer. If $1.83 breaks, I need to see where is the next low. Will just have to wait and see. ;)

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