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Capitaland: Insights with Fibo Fan.

Monday, April 11, 2011

In my last blog post on Capitaland, I said that "With immediate resistance at $3.54 (100dMA) and a possible whipsaw to $3.56 (gap resistance and 50% Fibo fan line), the near term upside could be limited from the current level. Support is at $3.41 in the next couple of sessions. This is a natural candlestick support and it coincides with the trendline support. A retest of support could see me initiating a long position in this counter." Read it here.

Today, Capitaland's share price pulled back and closed at $3.44, the low of the day, after touching a high of $3.53, just approximating the 100dMA. A test of support at $3.41 is very likely. The original plan was to initiate a long position at $3.41, if tested. Seeing, however, that the momentum oscillators are still bordering on overbought despite the pull back in share price, I decided to get some insights with a Fibo Fan.

The Fibo Fan connects the low of 17 March and the high of today. Now, what I am interested in are the positions of the golden ratios in the next few sessions. 38.2% would be at $3.38 and 50% would be at $3.32 in the next session. Notice how the 20dMA seems to coincide with the 50% line? This is likely to be a strong support, if tested. In between these two golden ratios, we find the 50dMA, still declining but gently so, at $3.36. This could provide some support as well.

So? Much safer entry point is at $3.32 while entry at $3.38 could be considered as a hedge. What about $3.41? Yes, that too could be considered a hedge although I am inclined not to put in a buy queue at $3.41 anymore because the momentum oscillators are still bordering on overbought.


Anonymous said...

Hi! AK,

Wow, you really analyze. I whacked $3.36 for long position because it sounded like "heart heart happy" or "whole-life happy" in Cantonese, for a long position. When you initiate a "long" position, what is your definition of "long"?

AK71 said...

Hi Anonymous,

If a job is worth doing, it is worth doing well. No half baked analysis for me. ;p

A "short" position is when someone sells shares he does not have. Initiating a "long" position is when someone buys shares he does not have. No time period is involved.

Could you include your name or initials in future comments? Thanks. :)

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