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Capitaland: 20wMA, the resistance to watch.

Thursday, January 12, 2012

Quite a few people asked me what do I think of Capitaland as I have not said anything about it in a while. Well, if we look at the weekly chart, it is obvious that the downtrend is intact.

However, the higher low on the MACD which accompanies the lower low in price gives us a positive divergence. Being in the weekly chart, it suggests that we could see a recovery in price eventually.

A recovery could meet with resistance provided by the declining 20wMA. If we notice, this MA has functioned as resistance since late October 2010. Yes, Capitaland's downtrend has gone on for more than a year.

The 20wMA is important because:

1. For traders, this is where they would probably sell.

2. If the 20wMA holds as resistance, price would probably form a lower high and continue to move lower.

3. If the 20wMA breaks and price moves higher on the back of increased volume, the downtrend could be broken and it might even reverse. Short covering could push price even higher.

What would I do? Sell at resistance at least partially. It is never wrong to take profit, especially in uncertain times such as now.


Anonymous said...

Hi Sir, so what is the 20wMA for Capl? I can't figure it out from your chart.. tks


AK71 said...

Hi KK,

20wMA = 20 weeks moving average.

That is the solid brown line on the chart.

Ray said...

hi AK,

Any thoughts abt SMRT? :)

AK71 said...

Hi Ray,

Just did a TA on SMRT. Check it out. ;)

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