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CapitaMalls Asia: Testing resistance.

Tuesday, March 29, 2011

CapitaMalls Asia once again tested resistance at $1.78 today. Volume is higher than the previous session but lower than two sessions ago when price gapped up to test $1.78.

In the face of falling share prices amongst Singapore developers today, the counter's resilience is impressive. The momentum oscillators continue to rise although the MACD is still in negative territory. That there is demand and support is quite obvious. However, could price move higher? It could but a more useful question is how high could it go before it hit another significant resistance (yes, "another" because $1.78 is four times tested since 25 Feb and is a significant resistance now).



In the event that $1.78 should be overcome, where do I see the next significant resistance? $1.83. In the event that price should decline, where do I see immediate support? $1.72 and if that goes, it would be $1.68. The downside could be as much as 10c while the upside could be limited to just 5c.

If we look at the Bollinger Bands and the MA envelope, it is hard not to see that they have gone flat. We could be seeing the start of a rangebound, sideways trading. This possibility cannot be discounted. In such an instance, I would take a look at the Stochastics which suggests, in this case, that the counter is overbought.

Readers who have followed my blog since its early days would remember that I talked about avoiding the memory effect. This basically means that we should make decisions based on current realities and that we should try not to be fettered to past memories which could lead to irrational decisions. Yes, we can only try.

Therefore, I could possibly do a partial divestment of my investment in this company tomorrow even if price fails to go higher.

Related post:
CapitaMalls Asia: Dual listing failed to excite.

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