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Yongnam's share price has been rather stable. As a counter's share price sees a reduction in volatility, Bollinger Bands would start to narrow and "squeeze". The beginning of such a squeeze is being observed here.
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| Daily chart. |
A trading strategy using Bollinger Bands is to look out for an oncoming squeeze. This could be the precursor of an impending surge in price.
Couple this observation with how the rising 50dMA seems capable of acting as support in this case, there is a chance of Yongnam's share price going higher in time. The 50dMA also coincides with a trendline support which connects the lows of mid December 2011, February 2012 and March 2012.
Volume has dwindled while the OBV has flatlined. Not much activity either way. Who would blink first? The bulls or the bears?
Yongnam's fundamentals are strong and technically, there is support for its share price at 25c.
The counter should also be trading CD come end of the month. The proposed dividend is 1c per share.
However, if support at 25c should break, Yongnam's share price could fall to 24c, a longer term support.
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| Weekly chart. |
Related post:
Yongnam: FY 2011 results.
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2 comments:
Volume is really too low to do meaningful TA but I'm vested at around 25cents, hope u're right that it surges soon! :D
Hi Ray,
Yup, it is a bit like buying into REITs with low trading volumes. TA is definitely more iffy. So, FA would have to pick up the slack.
This company has rock solid numbers. Let us hope its share price surges and not slumps. ;p
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